TDS reports third quarter 2017 results

CHICAGO, Nov. 8, 2017 /PRNewswire/ --

As previously announced, TDS will hold a teleconference November 8, 2017, at 9:30 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,251 million for the third quarter of 2017, versus $1,314 million for the same period one year ago. Net loss available to TDS common shareholders and related diluted loss per share were $181 million and $1.64, respectively, as a result of a $262 million ($190 million, net of tax and noncontrolling interests impacts) non-cash charge related to goodwill impairment recorded during the three months ended September 30, 2017. This compares to Net income available to TDS common shareholders and related diluted earnings per share of $13 million and $0.11, respectively, in the same period one year ago. Excluding this goodwill impairment charge and other non-controlling interest impacts associated with this charge, Net income available to TDS common shareholders and related diluted earnings per share were $9 million and $0.08, respectively, for the three months ended September 30, 2017.

"TDS' businesses continue on a solid path of achieving their priorities for 2017," said LeRoy T. Carlson Jr., TDS president and CEO. "U.S. Cellular grew its customer base while successfully reducing expenses. TDS Telecom expanded its wireline and cable segments while implementing its long-term broadband strategy of providing the best broadband connection in each market.

"U.S. Cellular added postpaid handset customers and continued to drive an exceptionally low level of postpaid handset churn. This shows that effective promotions and pricing through Total Plan packages, which include unlimited data offerings, are well received by both new and current customers. U.S. Cellular effectively managed cost reductions including lowering expenses in system operations, despite increased data traffic. Reflecting these positive results, U.S. Cellular raised its guidance on profitability.

"Wireline revenues and profitability increased at TDS Telecom, through higher revenues from fiber investments and through support from the Alternative Connect America Cost Model (A-CAM). TDS Telecom's Cable segment continued to see a rise in broadband connections and together with an increase in demand for higher data speeds, generated higher revenues and margin expansion. TDS Telecom recently completed its purchase agreements for Crestview Communications in Central Oregon, and K2 Communications in Mead, Colorado. These acquisitions provide excellent clustering opportunities as we continue to build broadband penetration in these target markets. OneNeck IT Solutions reported lower revenues due to less equipment sales to existing customers. Growing sales continues to be their top priority."

2017 Estimated Results
Current estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management's view as of November 8, 2017. 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.


                                                                       2017 Estimated Results


                                         U.S. Cellular                                 TDS Telecom                             TDS(3)

                                            Current    Previous                                                 Current       Previous        Current                  Previous

    (Dollars in millions)

    Total operating revenues (1)         $3,850-$3,950    $3,800-$4,000                                      $1,125-$1,150 $1,200-$1,250              $4,990-$5,115      $5,015-$5,265

    Adjusted OIBDA (1)(2)(4)                 $600-$700        $550-$650                                          $310-$330     $300-$340                $910-$1,030       $855-$955

    Adjusted EBITDA (2)                      $740-$840        $700-$800                                          $310-$330     $300-$340              $1,050-$1,170   $1,005-$1,145

    Capital expenditures (Approximately)                           $500                            Unchanged                             $225               Unchanged                  $735 Unchanged

The following tables provide reconciliations of Net income (loss) to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the nine months ended September 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.


                                                                   2017 Estimated Results


                                                           U.S. Cellular                      TDS Telecom                TDS(3)

    (Dollars in millions)

    Net income (loss) (GAAP)                                                    N/A                              N/A                     N/A

    Add back:

                                        Income tax
                                        expense
                                        (benefit)                              N/A                              N/A                     N/A

    Income (loss) before income taxes
     (GAAP)                                              $           (350)-(250)            $               50-70      $      (220)-(100)

    Add back:

                                        Interest
                                        expense                                110                                 5                      170

                                        Depreciation,
                                        amortization
                                        and accretion
                                        expense                                610                               220                      835

    EBITDA (Non-GAAP)                                    $               370-470            $             275-295      $          785-905

    Add back:

                                        Loss on
                                        impairment of
                                        goodwill                               370                                35                      265

                                       (Gain) loss on
                                        sale of
                                        business and
                                        other exit
                                        costs, net                               -                                -                       -

                                        (Gain) loss on
                                        license sales
                                        and exchanges,
                                        net                                   (20)                                -                    (20)

                                        (Gain) loss on
                                        asset
                                        disposals, net                          20                                 -                      20

    Adjusted EBITDA (Non-GAAP) (2)                       $               740-840            $             310-330      $      1,050-1,170

    Deduct:

                                        Equity in
                                        earnings of
                                        unconsolidated
                                        entities                               130                                 -                     130

                                        Interest and
                                        dividend
                                        income(1)                               10                                 -                      10

    Adjusted OIBDA (Non-GAAP)(1)(2)(4)                   $               600-700            $             310-330      $        910-1,030
                                                       ===               =======          ===             =======    ===        =========


                                                                                                                     Actual Results


                                                                                Nine Months Ended September 30, 2017                  Year ended December 31, 2016

                                                                                U.S.                             TDS                TDS (3)                      U.S.               TDS   TDS (3)
                                                                              Cellular                                                                         Cellular
                                                                                                               Telecom                                                            Telecom

    (Dollars in millions)

    Net income (loss) (GAAP)                                                                       $(259)                                 $18                           $(176)                   $49     $42       $52

    Add back:

                                             Income tax expense (benefit)                              (19)                                  24                               39                     33      25        40

    Income (loss) before income taxes (GAAP)                                                       $(278)                                 $42                           $(137)                   $82     $67       $92

    Add back:

                                             Interest expense                                            85                                    3                              128                    113       3       170

                                              Depreciation, amortization and
                                              accretion expense                                         460                                  166                              632                    618     224       850

    EBITDA (Non-GAAP)                                                                                $267                                 $211                             $623                   $813    $294    $1,112
                                                                                                     ----                                 ----                             ----                   ----    ----    ------

    Add back:

                                             Loss on impairment of goodwill                             370                                   35                              262                      -      -        -

                                              (Gain) loss on sale of business
                                              and                                                       (1)                                   -                             (1)                     -      -      (1)

                                             other exit costs, net

                                              (Gain) loss on license sales
                                              and exchanges, net                                       (19)                                   -                            (19)                  (19)    (1)     (20)

                                              (Gain) loss on asset disposals,
                                              net                                                        14                                    2                               16                     22       4        27

    Adjusted EBITDA (Non-GAAP) (2)                                                                   $631                                 $248                             $881                   $816    $298    $1,118
                                                                                                     ====                                 ====                             ====                   ====    ====    ======

    Deduct:

                                              Equity in earnings of
                                              unconsolidated entities                                   101                                    -                             101                    140       -      140

                                             Interest and dividend income(1)                              6                                    4                               12                      6       3        11

                                             Other, net                                                   1                                    -                               -                     1       -        -

    Adjusted OIBDA (Non-GAAP) (1)(2)(4)                                                              $523                                 $244                             $768                   $669    $295      $967
                                                                                                     ====                                 ====                             ====                   ====    ====      ====

    Note: Totals may not foot due to rounding differences.


                          (1)    Equipment installment plan interest income is reflected as a
                                 component of Service revenues consistent with an accounting
                                 policy change effective January 1, 2017.  All prior period
                                 numbers have been recast to conform to this accounting change.


                         (2)    Adjusted EBITDA is defined as net income adjusted for the items
                                 set forth in the reconciliation above.  Adjusted OIBDA is defined
                                 as net income adjusted for the items set forth in the
                                 reconciliation above.  Adjusted EBITDA and Adjusted OIBDA are not
                                 measures of financial performance under Generally Accepted
                                 Accounting Principles in the United States (GAAP) and should not
                                 be considered as alternatives to Net income or Cash flows from
                                 operating activities, as indicators of cash flows or as measures
                                 of liquidity.  TDS does not intend to imply that any such items
                                 set forth in the reconciliation above are non-recurring,
                                 infrequent or unusual; such items may occur in the future.
                                 Management uses Adjusted EBITDA and Adjusted OIBDA as
                                 measurements of profitability, and therefore reconciliations to
                                 Net income are deemed appropriate.  Management believes Adjusted
                                 EBITDA and Adjusted OIBDA are useful measures of TDS' operating
                                 results before significant recurring non-cash charges, gains and
                                 losses, and other items as presented above as they provide
                                 additional relevant and useful information to investors and other
                                 users of TDS' financial data in evaluating the effectiveness of
                                 its operations and underlying business trends in a manner that is
                                 consistent with management's evaluation of business performance.
                                 Adjusted EBITDA shows adjusted earnings before interest, taxes,
                                 depreciation, amortization and accretion, and gains and losses,
                                 while Adjusted OIBDA reduces this measure further to exclude
                                 Equity in earnings of unconsolidated entities and Interest and
                                 dividend income in order to more effectively show the performance
                                 of operating activities excluding investment activities.  The
                                 table above reconciles Adjusted EBITDA and Adjusted OIBDA flow to
                                 the corresponding GAAP measure, Net income or Income before
                                 income taxes.


                          (3)    The TDS column includes U.S. Cellular, TDS Telecom and also the
                                 impacts of consolidating eliminations, corporate operations and
                                 non-reportable segments, all of which are not presented above.


                          (4)    A reconciliation of Adjusted OIBDA (Non-GAAP) to Operating income
                                 (GAAP) for September 30, 2017 actual results can be found on TDS'
                                 website at investors.tdsinc.com.

Conference Call Information
TDS will hold a conference call on November 8, 2017 at 9:30 a.m. Central Time.

    --  Access the live call on the Events & Presentations page of
        investors.tdsinc.com or at
        https://www.webcaster4.com/Webcast/Page/1145/23219.
    --  Access 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 investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000(®) company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 9,900 people as of September 30, 2017.

Visit www.tdsinc.com for 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: intense competition; the ability to execute TDS' business strategy; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; 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 of TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of services and products 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, which are incorporated by reference herein.

For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com


                                                                                                   United States Cellular Corporation

                                                                                                   Summary Operating Data (Unaudited)


    As of or for the Quarter Ended                                                           9/30/2017                    6/30/2017               3/31/2017                                     12/31/2016                           9/30/2016

    Retail Connections

                                           Postpaid

                                            Total at end of
                                            period                                 4,513,000                                   4,478,000                           4,455,000                           4,482,000                            4,484,000

                                           Gross additions                           191,000                                     174,000                             146,000                             187,000                              174,000

                                                                   Feature phones                    7,000                                   7,000                                7,000                                7,000                                10,000

                                                                   Smartphones                     132,000                                 116,000                               88,000                              109,000                               105,000

                                                                    Connected
                                                                    devices                         52,000                                  51,000                               51,000                               71,000                                59,000

                                            Net additions
                                            (losses)                                  35,000                                      23,000                            (27,000)                            (2,000)                             (6,000)

                                                                   Feature phones                 (15,000)                               (15,000)                            (19,000)                            (21,000)                             (20,000)

                                                                   Smartphones                      44,000                                  34,000                              (9,000)                             (4,000)                              (7,000)

                                                                    Connected
                                                                    devices                          6,000                                   4,000                                1,000                               23,000                                21,000

                                           ARPU (1)                                   $43.41                                      $44.60                              $45.42                              $45.19                               $47.08

                                           ABPU (Non-GAAP)(2)                         $54.71                                      $55.19                              $55.82                              $55.43                               $56.79

                                           ARPA (3)                                  $116.36                                     $119.73                             $121.88                             $120.67                              $125.31

                                           ABPA (Non-GAAP)(4)                        $146.65                                     $148.15                             $149.78                             $148.02                              $151.16

                                           Churn rate (5)                              1.16%                                      1.13%                              1.29%                              1.41%                               1.34%

                                                                   Handsets                          0.96%                                  0.91%                               1.08%                               1.23%                                1.22%

                                                                    Connected
                                                                    devices                          2.33%                                  2.35%                               2.55%                               2.49%                                2.04%

                                           Prepaid

                                            Total at end of
                                            period                                   515,000                                     484,000                             480,000                             484,000                              480,000

                                           Gross additions                           102,000                                      73,000                              78,000                              83,000                              132,000

                                            Net additions
                                            (losses)                                  31,000                                       3,000                             (4,000)                              4,000                               67,000

                                           ARPU (1)                                   $33.12                                      $33.52                              $33.66                              $33.25                               $34.39

                                           Churn rate (5)                              4.75%                                      4.93%                              5.69%                              5.44%                               4.84%

    Total connections at end of period (6)                              5,089,000                               5,023,000                               4,996,000                       5,031,000                            5,030,000

    Market penetration at end of period

                                            Consolidated operating
                                            population                            31,834,000                                  32,089,000                          32,089,000                          31,994,000                           31,994,000

                                            Consolidated operating
                                            penetration (7)                              16%                                        16%                                16%                                16%                                 16%

    Capital expenditures (millions)                                          $112                                     $84                                     $61                            $171                                 $103

    Total cell sites in service                                             6,436                                   6,421                                   6,417                           6,415                                6,374

    Owned towers                                                            4,051                                   4,044                                   4,041                           4,040                                4,015


      (1)  Average Revenue Per User (ARPU) -metric is calculated by dividing
           a revenue base by an average number of connections and by the
           number of months in the period.  These revenue bases and
           connection populations are shown below:

                      ?            Postpaid ARPU consists of total postpaid service revenues
                                   and postpaid connections.

                      ?            Prepaid ARPU consists of total prepaid service revenues
                                   and prepaid connections.

     (2)  Average Billings Per User (ABPU) - non-GAAP metric is calculated
           by dividing total postpaid service revenues plus equipment
           installment plan billings by the average number of postpaid
           connections and by the number of months in the period.  Refer to
           the end of this release for a reconciliation of this metric to
           its most comparable GAAP metric.

      (3)  Average Revenue Per Account (ARPA) -metric is calculated by
           dividing total postpaid service revenues by the average number of
           postpaid accounts and by the number of months in the period.

     (4)  Average Billings Per Account (ABPA) - non-GAAP metric is
           calculated by dividing total postpaid service revenues plus
           equipment installment plan billings by the average number of
           postpaid accounts and by the number of months in the period.
           Refer to the end of this release for a reconciliation of this
           metric to its most comparable GAAP metric.

      (5)  Churn rate represents the percentage of the connections that
           disconnect service each month.  These rates represent the average
           monthly churn rate for each respective period.

      (6) Includes reseller and other connections.

      (7)  Market penetration is calculated by dividing the number of
           wireless connections at the end of the period by the total
           population of consolidated operating markets as estimated by
           Nielsen.


                                                                                  TDS Telecom

                                                                       Summary Operating Data (Unaudited)


    As of or for the Quarter Ended                           9/30/2017                           6/30/2017      3/31/2017     12/31/2016 9/30/2016

    TDS Telecom

    Wireline
    --------

                   Residential connections

                   Voice (1)                           298,200                                          304,600           308,200                 310,600 314,600

                   Broadband (2)                       229,900                                          230,200           228,500                 229,500 232,800

                   IPTV (3)                             47,200                                           46,200            45,200                  45,300  43,600

                      Wireline residential connections 575,300                                          581,000           581,900                 585,400 590,900
                                                       -------                                          -------           -------                 ------- -------


                    Total residential revenue
                    per connection (4)                  $46.07                                           $46.39            $45.17                  $44.27  $44.25


                   Commercial connections

                   Voice (1)                           146,900                                          150,500           154,000                 157,400 160,900

                   Broadband (2)                        20,900                                           21,000            21,200                  21,400  21,700

                   managedIP (5)                       147,600                                          149,700           150,300                 150,900 151,500

                      Wireline commercial connections  315,300                                          321,200           325,500                 329,700 334,000
                                                       -------                                          -------           -------                 ------- -------


                    Total Wireline
                    connections                        890,700                                          902,200           907,400                 915,200 924,900



    Cable
    -----

                   Cable Connections

                   Broadband (6)                       143,800                                          140,300           137,800                 133,700 130,200

                   Video (7)                            97,900                                           97,900            97,600                  99,000 101,100

                   Voice (8)                            58,900                                           58,700            59,000                  59,600  59,800

                      Cable connections                300,600                                          297,000           294,300                 292,400 291,000
                                                       =======                                          =======           =======                 ======= =======


    Numbers may not foot due to rounding.


                   (1)    The individual circuits connecting a customer to
                           Wireline's central office facilities.

                   (2)    The number of Wireline customers provided high-
                           capacity data circuits via various technologies,
                           including DSL and dedicated internet circuit
                           technologies.

                   (3)    The number of Wireline customers provided video
                           services using IP networking technology.

                   (4)    Total residential revenue per connection is calculated
                           by dividing total Wireline residential revenue by the
                           average number of Wireline residential connections and
                           by the number of months in the period.

                   (5)    The number of telephone handsets, data lines and IP
                           trunks providing communications using IP networking
                           technology.

                   (6)    Billable number of lines into a building for high-
                           speed data services.

                   (7)    Generally, a home or business receiving video
                           programming counts as one video connection. In
                           counting bulk residential or commercial connections,
                           such as an apartment building or hotel, connections
                           are counted based on the number of units/rooms within
                           the building receiving service.

                   (8)    Billable number of lines into a building for voice
                           services.


                                                             TDS Telecom

                                                  Capital Expenditures (Unaudited)


    Quarter Ended         9/30/2017     6/30/2017                            3/31/2017    12/31/2016 9/30/2016

    (Dollars in millions)

    Wireline                        $41                                      $33       $17                  $26 $27

    Cable                            14                                       12         9                   13  11

    HMS                               2                                        4         6                    5   2

                                    $58                                      $49       $33                  $45 $40
                                    ===                                      ===       ===                  === ===

     Numbers may not foot due to rounding.


                                                                                                                 Telephone and Data Systems, Inc.

                                                                                                         Consolidated Statement of Operations Highlights

                                                                                                                           (Unaudited)

                                                                                                                                                                        Three Months Ended September 30,

                                                                                                                                                             2017                                        2016            2017 vs. 2016

                                                                                                                                                                     Increase (Decrease)

    (Dollars and shares in millions, except per share amounts)

    Operating revenues

                                                                           U.S. Cellular (1)                                                            $963                                             $1,023                          $(60)               (6)%

                                                                           TDS Telecom                                                                   285                                                287                            (3)               (1)%

                                                                           All Other (2)                                                                   3                                                  4                            (1)                  -

                                                                                                                                                              1,251                                             1,314                               (63)               (5)%
                                                                                                                                                              -----                                             -----                                ---

    Operating expenses

                                                                           U.S. Cellular

                                                                            Expenses excluding depreciation,
                                                                            amortization and accretion                                                   796                                                846                           (50)               (6)%

                                                                           Depreciation, amortization and accretion                                      153                                                155                            (2)               (2)%

                                                                           Loss on impairment of goodwill                                                370                                                  -                           370                 N/M

                                                                           (Gain) loss on asset disposals, net                                             5                                                  7                            (2)              (26)%

                                                                            (Gain) loss on sale of business and other
                                                                            exit costs, net                                                              (1)                                                 -                           (1)                N/M

                                                                            (Gain) loss on license sales and
                                                                            exchanges, net                                                                 -                                               (7)                             7                100%

                                                                                                                                                              1,323                                             1,001                                322                 32%
                                                                                                                                                              -----                                             -----                                ---

                                                                           TDS Telecom

                                                                            Expenses excluding depreciation,
                                                                            amortization and accretion                                                   206                                                217                           (11)               (5)%

                                                                           Depreciation, amortization and accretion                                       56                                                 57                            (1)               (2)%

                                                                           Loss on impairment of goodwill                                                 35                                                  -                            35                 N/M

                                                                           (Gain) loss on asset disposals, net                                             1                                                  2                            (1)              (51)%

                                                                                                                                                                297                                               276                                 21                  8%
                                                                                                                                                                ---                                               ---                                ---

                                                                           All Other (2)

                                                                            Expenses excluding depreciation and
                                                                            amortization                                                                   5                                                  4                              1                 64%

                                                                           Depreciation and amortization                                                   -                                                 2                            (2)               (9)%

                                                                           Loss on impairment of goodwill(3)                                           (143)                                                  -                         (143)                N/M

                                                                           (Gain) loss on asset disposals, net                                             -                                               (1)                             1              (100)%

                                                                                                                                                              (137)                                                5                              (143)             (100)%
                                                                                                                                                               ----                                               ---                               ----

                                                                                   Total operating expenses                                            1,483                                              1,281                            202                 16%
                                                                                                                                                       -----                                              -----                            ---

    Operating income (loss)

                                                                           U.S. Cellular (1)                                                           (360)                                                 22                          (382)            >(100)%

                                                                           TDS Telecom                                                                  (13)                                                12                           (24)            >(100)%

                                                                           All Other (2)                                                                 141                                                (1)                           142               >100%

                                                                                                                                                              (232)                                               33                              (265)            >(100)%
                                                                                                                                                               ----                                               ---                               ----

    Investment and other income (expense)

                                                                           Equity in earnings of unconsolidated entities                                  35                                                 38                            (3)               (6)%

                                                                           Interest and dividend income (1)                                                4                                                  2                              2               >100%

                                                                           Interest expense                                                             (43)                                              (42)                           (1)               (2)%

                                                                           Other, net                                                                      -                                               (1)                             1               >100%


                                                                            Total investment and other income
                                                                            (expense)(1)                                                                 (4)                                               (3)                           (1)              (38)%
                                                                                                                                                         ---                                                ---                            ---

    Income (loss) before income taxes                                                                                  (236)                                     30                                             (266)                 >(100)%

                                                                           Income tax expense (benefit)                                                  (5)                                                14                           (19)            >(100)%


    Net income (loss)                                                                                                  (231)                                     16                                             (247)                 >(100)%

                                                                            Less: Net income (loss) attributable to
                                                                            noncontrolling

                                                                           interests, net of tax                                                        (50)                                                 3                           (53)            >(100)%
                                                                                                                                                         ---                                                ---                            ---

    Net income (loss) attributable to TDS shareholders                                                                 (181)                                     13                                             (194)                 >(100)%

                                                                           TDS Preferred dividend requirement                                              -                                                 -                             -                  -


    Net income (loss) available to TDS common shareholders                                                                                    $(181)                                 $13                                $(194)                  >(100)%
                                                                                                                                               =====                                  ===                                 =====


    Basic weighted average shares outstanding                                                                            111                                     110                                                 1                       1%

    Basic earnings (loss) per share available to TDS common shareholders                                                                     $(1.64)                               $0.12                               $(1.76)                      N/M
                                                                                                                                              ======                                =====                                ======


    Diluted weighted average shares outstanding                                                                          111                                     111                                                 -                    (1)%

    Diluted earnings (loss) per share available to TDS common shareholders                                                                   $(1.64)                               $0.11                               $(1.75)                  >(100)%
                                                                                                                                              ======                                =====                                ======

    N/M - Percentage change not meaningful


    Numbers may not foot due to rounding.


    End Notes (1) (2) (3)  ?  Explained on page 11 of the release


                                                                                   Telephone and Data Systems, Inc.

                                                                            Consolidated Statement of Operations Highlights

                                                                                              (Unaudited)

                                                                                                                       Nine Months Ended September 30,

                                                                                                                2017                      2016                       2017 vs. 2016

                                                                                                                                    Increase (Decrease)

    (Dollars and shares in millions, except per share
     amounts)

    Operating revenues

                                                       U.S. Cellular(1)                                       $2,862                                   $2,985                      $(123)                (4)%

                                                       TDS Telecom                                               865                                      868                         (4)                   -

                                                       All Other(2)                                                9                                       10                         (1)                (2)%

                                                                                                                          3,736                                   3,863                        (127)                 (3)%
                                                                                                                          -----                                   -----                         ----

    Operating expenses

                                                       U.S. Cellular

                                                       Expenses
                                                        excluding
                                                        depreciation,
                                                        amortization
                                                        and accretion                                          2,339                                    2,460                       (121)                (5)%

                                                        Depreciation,
                                                        amortization
                                                        and accretion                                            460                                      462                         (2)                   -

                                                        Loss on
                                                        impairment of
                                                        goodwill                                                 370                                                -                         370                   N/M

                                                        (Gain) loss on
                                                        asset
                                                        disposals, net                                            14                                       16                         (2)               (17)%

                                                       (Gain) loss on
                                                        sale of
                                                        business and
                                                        other exit
                                                        costs, net                                               (1)                                               -                         (1)              >(100)%

                                                        (Gain) loss on
                                                        license sales
                                                        and exchanges,
                                                        net                                                     (19)                                    (16)                        (3)               (16)%

                                                                                                                          3,163                                   2,922                          241                    8%
                                                                                                                          -----                                   -----                          ---

                                                       TDS Telecom

                                                       Expenses
                                                        excluding
                                                        depreciation,
                                                        amortization
                                                        and accretion                                            621                                      644                        (23)                (4)%

                                                        Depreciation,
                                                        amortization
                                                        and accretion                                            166                                      168                         (2)                (1)%

                                                        Loss on
                                                        impairment of
                                                        goodwill                                                  35                                                -                          35                   N/M

                                                        (Gain) loss on
                                                        asset
                                                        disposals, net                                             2                                        4                         (1)               (38)%

                                                                                                                            824                                     816                            9                    1%
                                                                                                                            ---                                     ---                          ---

                                                       All Other(2)

                                                       Expenses
                                                        excluding
                                                        depreciation
                                                        and
                                                        amortization                                               8                                        8                                    -                  25%

                                                        Depreciation
                                                        and
                                                        amortization                                               6                                        6                                    -                (10)%

                                                        Loss on
                                                        impairment of
                                                        goodwill(3)                                            (143)                                               -                       (143)                  N/M

                                                       (Gain) loss on
                                                        sale of
                                                        business and
                                                        other exit
                                                        costs, net                                                          -                                    (1)                           1                   N/M

                                                                                                                          (129)                                     13                        (142)              >(100)%
                                                                                                                           ----                                     ---                         ----

                                                                           Total operating expenses                       3,858                                   3,750                          108                    3%
                                                                                                                          -----                                   -----                          ---

    Operating income (loss)

                                                       U.S. Cellular(1)                                        (301)                                      63                       (364)             >(100)%

                                                       TDS Telecom                                                41                                       53                        (12)               (23)%

                                                       All Other(2)                                              138                                      (3)                        141                >100%

                                                                                                                          (122)                                    113                        (235)              >(100)%
                                                                                                                           ----                                     ---                         ----

    Investment and other income (expense)

                                                        Equity in earnings
                                                        of unconsolidated
                                                        entities                                                 101                                      109                         (8)                (8)%

                                                        Interest and
                                                        dividend income(1)                                        12                                        7                           5                  53%

                                                       Interest expense                                        (128)                                   (127)                        (1)                (1)%

                                                       Other, net                                                           -                                      1                          (1)                >100%

                                                        Total
                                                        investment and
                                                        other income
                                                        (expense)(1)                                            (15)                                    (10)                        (5)               (50)%
                                                                                                                 ---                                      ---                         ---

    Income (loss) before income taxes                                                                                 (137)                                    103                        (240)              >(100)%

                                                       Income tax expense                                         39                                       45                         (6)               (12)%


    Net income (loss)                                                                                                 (176)                                     58                        (234)              >(100)%

                                                        Less: Net income
                                                        (loss)
                                                        attributable to
                                                        noncontrolling

                                                        interests, net
                                                        of tax                                                  (42)                                       9                        (51)             >(100)%
                                                                                                                 ---                                      ---                         ---

    Net income (loss) attributable to TDS shareholders                                                                (134)                                     49                        (183)              >(100)%

                                                        TDS Preferred
                                                        dividend
                                                        requirement                                                -                                       -                          -               (67)%


    Net income (loss) available to TDS common
     shareholders                                                                                                     $(134)                                    $49                       $(183)              >(100)%
                                                                                                                       =====                                     ===                        =====


    Basic weighted average shares outstanding                                                                           111                                     110                            1                    1%

    Basic earnings (loss) per share available to
     TDS common shareholders                                                                                         $(1.21)                                  $0.44                      $(1.65)              >(100)%
                                                                                                                      ======                                   =====                       ======

    Diluted weighted average shares outstanding                        111                                                   111                                       -               1%

    Diluted earnings (loss) per share available
     to TDS common shareholders                                                                                      $(1.21)                                  $0.44                      $(1.65)              >(100)%
                                                                                                                      ======                                   =====                       ======


    N/M - Percentage change not meaningful


    Numbers may not foot due to rounding.


    End Notes (1) (2) (3)  ??  Explained on page 11 of the release


                                                      Telephone and Data Systems, Inc.

                                                    Consolidated Statement of Cash Flows

                                                                 (Unaudited)


                                                                                                       Nine Months Ended

                                                                                                         September 30,

                                                                                                       2017               2016

    (Dollars in millions)

    Cash flows from operating activities

                                            Net income (loss)                                          $(176)                    $58

                                            Add (deduct)
                                             adjustments to
                                             reconcile net income
                                             (loss) to net cash
                                             flows

                                              from operating
                                               activities

                                                         Depreciation,
                                                         amortization
                                                         and accretion                                      632                     636

                                                         Bad debts
                                                         expense                                             68                      72

                                                         Stock-based
                                                         compensation
                                                         expense                                             34                      29

                                                         Deferred income
                                                         taxes, net                                        (23)                     11

                                                         Equity in
                                                         earnings of
                                                         unconsolidated
                                                         entities                                         (101)                  (109)

                                                         Distributions
                                                         from
                                                         unconsolidated
                                                         entities                                            85                      55

                                                         Loss on
                                                         impairment of
                                                         goodwill                                           262                       -

                                                         (Gain) loss on
                                                         asset
                                                         disposals, net                                      16                      20

                                             (Gain) loss on
                                                         sale of
                                                         business and
                                                         other exit
                                                         costs, net                                         (1)                    (1)

                                                         (Gain) loss on
                                                         license sales
                                                         and exchanges,
                                                         net                                               (19)                   (16)

                                                         Noncash
                                                         interest                                             2                       2

                                                         Other operating
                                                         activities                                                   -                   (3)

                                             Changes in assets and
                                             liabilities from
                                             operations

                                                         Accounts
                                                         receivable                                         (6)                    (9)

                                                         Equipment
                                                         installment
                                                         plans
                                                         receivable                                       (164)                  (160)

                                                        Inventory                                            44                       3

                                                         Accounts
                                                         payable                                           (59)                     47

                                                         Customer
                                                         deposits and
                                                         deferred
                                                         revenues                                          (16)                   (41)

                                                        Accrued taxes                                        41                      77

                                                         Accrued
                                                         interest                                            11                       7

                                                         Other assets
                                                         and
                                                         liabilities                                        (9)                   (40)

                                                                            Net cash provided by
                                                                            operating activities                      621                    638
                                                                                                                      ---                    ---


    Cash flows from investing activities

                                             Cash paid for
                                             additions to
                                             property, plant and
                                             equipment                                                  (398)                  (426)

                                             Cash paid for
                                             acquisitions and
                                             licenses                                                   (200)                   (46)

                                             Cash paid for
                                             investments                                                (100)                      -

                                             Cash received from
                                             divestitures and
                                             exchanges                                                     19                      20

                                             Federal Communications
                                             Commission deposit                                                     -                 (143)

                                             Other investing
                                             activities                                                     1                       1

                                                                            Net cash used in investing
                                                                            activities                              (678)                 (594)
                                                                                                                     ----                   ----


    Cash flows from financing activities

                                             Repayment of long-
                                             term debt                                                    (9)                    (9)

                                             Issuance of long-term
                                             debt                                                                   -                     2

                                             TDS Common Shares
                                             reissued for benefit
                                             plans, net of tax
                                             payments                                                     (1)                      7

                                             U.S. Cellular Common
                                             Shares reissued for
                                             benefit plans, net of
                                             tax payments                                                           -                     4

                                             Repurchase of TDS
                                             Common Shares                                                          -                   (3)

                                             Repurchase of U.S.
                                             Cellular Common
                                             Shares                                                                 -                   (2)

                                             Repurchase of TDS
                                             Preferred Shares                                             (1)                      -

                                             Dividends paid to TDS
                                             shareholders                                                (51)                   (49)

                                             Payment of debt
                                             issuance costs                                                         -                   (4)

                                             Distributions to
                                             noncontrolling
                                             interests                                                    (2)                    (1)

                                             Other financing
                                             activities                                                     5                      11

                                                                            Net cash used in financing
                                                                            activities                               (59)                  (44)
                                                                                                                      ---                    ---


    Net increase (decrease) in cash and cash equivalents                                                       (116)                     -


    Cash and cash equivalents

                                            Beginning of period                                           900                     985

                                            End of period                                                $784                    $985


                                    Telephone and Data Systems, Inc.

                                  Consolidated Balance Sheet Highlights

                                               (Unaudited)


                                                 ASSETS



                                                                            September         December
                                                                                 30,                31,

                                                                                 2017              2016

    (Dollars in millions)

    Current assets

                                           Cash and cash
                                           equivalents                             $784                    $900

                                           Short-term
                                           investments                              100                       -

                                          Accounts
                                           receivable
                                           from
                                           customers
                                           and others,
                                           net                                      871                     851

                                           Inventory,
                                           net                                      107                     151

                                           Prepaid
                                           expenses                                 109                     115

                                           Income taxes
                                           receivable                                 2                      10

                                           Other current
                                           assets                                    31                      32

                                          Total current assets                    2,004                   2,059


    Assets held for sale                                     5                              8


    Licenses                                             2,234                          1,895

    Goodwill                                               508                            766

    Franchise rights                                       244                            244

    Other intangible assets, net                            26                             33

    Investments in unconsolidated
     entities                                              467                            451

    Other investments                                        -                             1


    Property, plant and equipment, net                   3,337                          3,555


    Other assets and deferred charges                      385                            434


    Total assets                                                     $9,210                        $9,446
                                                                     ======                        ======


                                                                      Telephone and Data Systems, Inc.

                                                                   Consolidated Balance Sheet Highlights

                                                                                (Unaudited)


                                                                           LIABILITIES AND EQUITY



                                                                                     September 30,                 December 31,

                                                                                              2017                          2016

    (Dollars and shares in millions, except per share amounts)

    Current liabilities

                           Current portion of
                           long-term debt                                                      $20                                  $12

                          Accounts payable                                                     308                                  365

                           Customer deposits
                           and deferred
                           revenues                                                            211                                  229

                          Accrued interest                                                      22                                   11

                          Accrued taxes                                                         72                                   44

                          Accrued compensation                                                 112                                  127

                           Other current
                           liabilities                                                          84                                   99

                           Total current
                           liabilities                                                         829                                  887


    Deferred liabilities and credits

                           Deferred income tax
                           liability, net                                                      898                                  922

                           Other deferred
                           liabilities and
                           credits                                                             480                                  453


    Long-term debt, net                                                                                  2,443                          2,433


    Noncontrolling interests with redemption features                                                        1                              1


    Equity

                           TDS shareholders'
                           equity

                           Series A Common
                           and Common
                           Shares, par
                           value $.01                                                            1                                    1

                           Capital in excess
                           of par value                                                      2,404                                2,386

                           Treasury shares,
                           at cost                                                           (679)                               (698)

                           Accumulated other
                           comprehensive
                           income                                                                -                                   1

                          Retained earnings                                                  2,257                                2,454

                                                    Total TDS shareholders' equity                           3,983                          4,144


                          Preferred shares                                                       -                                   1

                           Noncontrolling
                           interests                                                           576                                  605


                          Total equity                                                       4,559                                4,750


    Total liabilities and equity                                                                         $9,210                         $9,446
                                                                                                         ======                         ======


             (1)    Equipment installment plan
                     interest income is reflected
                     as a component of Service
                     revenues consistent with an
                     accounting policy change
                     effective January 1, 2017.
                     All prior period numbers
                     have been recast to conform
                     to this accounting change.


             (2)    Consists of TDS corporate,
                     intercompany eliminations
                     and all other business
                     operations not included in
                     the U.S. Cellular and TDS
                     Telecom segments.


             (3)    During the three months ended
                     September 30, 2017, U.S.
                     Cellular recorded a goodwill
                     impairment of $370 million
                     while TDS recorded a
                     goodwill impairment of the
                     U.S. Cellular reporting unit
                     of $227 million.  Prior to
                     2009, TDS accounted for U.S.
                     Cellular's share repurchases
                     as step acquisitions,
                     allocating a portion of the
                     share repurchase value to
                     TDS' Goodwill.  Further,
                     goodwill was impaired at the
                     TDS level in 2003 but not at
                     the U.S. Cellular level,
                     effectively resulting in a
                     lower basis of goodwill
                     attributable to the U.S.
                     Cellular reporting unit
                     rather than at U.S. Cellular
                     itself.  Consequently, U.S.
                     Cellular's Goodwill on a
                     stand-alone basis and any
                     resulting impairments of
                     Goodwill does not equal the
                     TDS consolidated Goodwill
                     related to U.S. Cellular.


                                                                                    Balance Sheet Highlights

                                                                                          (Unaudited)


                                                                                           September 30, 2017

                                                           U.S.                 TDS                   TDS Corporate      Intercompany               TDS

                                                         Cellular             Telecom                    & Other         Eliminations          Consolidated

    (Dollars in millions)

    Cash and cash equivalents                                          $498                                      $22                      $264                    $        -            $784

    Affiliated cash investments                        -                             533                               -                                 (533)                 -

                                                                       $498                                     $555                      $264                        $(533)            $784
                                                                       ====                                     ====                      ====                         =====             ====


    Short-term investments                                       $50                    $            -                                $50                     $    -             $100
                                                                 ===                  ===          ===                                ===                   ===  ===             ====


    Licenses, goodwill and other intangible
     assets                                                          $2,225                                     $783                        $4                    $        -          $3,012

    Investment in unconsolidated entities                              429                                        4                        41                           (7)             467

                                                                     $2,654                                     $787                       $45                          $(7)          $3,479
                                                                     ======                                     ====                       ===                           ===           ======


    Property, plant and equipment, net                               $2,263                                   $1,052                       $22                    $        -          $3,337
                                                                     ======                                   ======                       ===                  ===      ===          ======


    Long-term debt, net:

                                   Current portion                        $18                                       $1                        $1                    $        -             $20

                                   Non-current portion                  1,626                                        4                       813                             -           2,443


                                                                     $1,644                                       $5                      $814                    $        -          $2,463
                                                                     ======                                      ===                      ====                  ===      ===          ======


                                                 TDS Telecom Highlights

                                                      (Unaudited)


                                                     Three Months Ended September 30,

                                                                                                                    2017 vs. 2016

                                               2017                     2016                    Increase (Decrease)

    (Dollars in millions)

    Wireline

    Operating revenues

                              Residential       $80                                     $78                                $1                  2%

                              Commercial         50                                      53                               (3)               (6)%

                              Wholesale          49                                      43                                 6                 13%

                               Total
                               service
                               revenues         178                                     174                                 4                  2%

                               Equipment and
                               product sales      -                                      -                                -              (28)%


                                                          179                                    175                                 4                     2%
                                                          ---                                    ---                               ---

    Operating expenses

                               Cost of
                               services          66                                      67                               (1)               (1)%

                               Cost of
                               equipment and
                               products           -                                      1                                 -              (37)%

                               Selling,
                               general and
                               administrative
                               expenses          49                                      50                               (2)               (3)%


                              Expenses
                               excluding
                               depreciation,
                               amortization
                               and accretion    115                                     117                               (3)               (2)%

                               Depreciation,
                               amortization
                               and accretion     38                                      41                               (3)               (8)%

                               (Gain) loss on
                               asset
                               disposals,
                               net                -                                      1                                 -              (76)%

                                                          152                                    159                               (6)                  (4)%
                                                          ---                                    ---                               ---

                               Operating
                               income           $26                                     $16                               $10                 63%
                              ----------


    Cable

    Operating revenues

                              Residential       $43                                     $37                                $6                 16%

                              Commercial          9                                       9                                 -               (2)%

                                                 52                                      46                                 6                 12%
                                                ---                                     ---                               ---

    Operating expenses

                               Cost of
                               services          25                                      23                                 2                  8%

                               Selling,
                               general and
                               administrative
                               expenses          13                                      13                                 -                 2%


                              Expenses
                               excluding
                               depreciation,
                               amortization
                               and accretion     38                                      36                                 2                  6%

                               Depreciation,
                               amortization
                               and accretion     11                                       9                                 2                 24%

                               (Gain) loss on
                               asset
                               disposals,
                               net                1                                       1                                 -              (33)%

                                                           50                                     46                                 4                     8%
                                                          ---                                    ---                               ---

                               Operating
                               income            $2                        $              -                               $2               >100%
                              ----------                                ---


    HMS

    Operating revenues

                               Service
                               revenues         $28                                     $29                              $(1)               (2)%

                               Equipment and
                               product sales     27                                      39                              (11)              (30)%

                                                           56                                     68                              (12)                 (18)%
                                                          ---                                    ---                               ---

    Operating expenses

                               Cost of
                               services          21                                      21                                 -                  -

                               Cost of
                               equipment and
                               products          22                                      33                              (10)              (31)%

                               Selling,
                               general and
                               administrative
                               expenses          11                                      12                                 -               (3)%


                              Expenses
                               excluding
                               depreciation,
                               amortization
                               and accretion     54                                      65                              (11)              (16)%

                               Depreciation,
                               amortization
                               and accretion      7                                       7                                 -               (3)%

                               Loss on
                               impairment of
                               goodwill          35                                       -                               35                 N/M

                                                           96                                     72                                24                    33%
                                                          ---                                    ---                               ---

                              Operating loss  $(41)                                   $(5)                            $(36)            >(100)%
                              ------------


    Intercompany revenues                             $(1)                                  $(1)                       $        -                 (10)%

    Intercompany expenses                              (1)                                   (1)                                -                 (10)%
                                                       ---                                    ---                               ---

    Total TDS Telecom operating
     income (loss)                                   $(13)                                   $12                             $(24)               >(100)%
                                                      ====                                    ===                              ====


    N/M - Percentage change not meaningful


    Numbers may not foot due to rounding.


                                                 TDS Telecom Highlights

                                                      (Unaudited)


                                                     Nine Months Ended September 30,

                                                                                                                   2017 vs. 2016

                                               2017                     2016                   Increase (Decrease)

    (Dollars in millions)

    Wireline

    Operating revenues

                              Residential      $240                                   $232                                $8                  3%

                              Commercial        151                                    160                               (9)               (6)%

                              Wholesale         147                                    130                                17                 13%

                               Total
                               service
                               revenues         537                                    522                                16                  3%

                               Equipment and
                               product sales      1                                      1                                 -              (34)%


                                                          538                                   523                                15                   3%
                                                          ---                                   ---                               ---

    Operating expenses

                               Cost of
                               services         194                                    192                                 2                  1%

                               Cost of
                               equipment and
                               products           2                                      2                                 -               (7)%

                               Selling,
                               general and
                               administrative
                               expenses         145                                    148                               (3)               (2)%


                              Expenses
                               excluding
                               depreciation,
                               amortization
                               and accretion    340                                    342                               (1)                  -

                               Depreciation,
                               amortization
                               and accretion    114                                    119                               (5)               (5)%

                               (Gain) loss on
                               asset
                               disposals,
                               net                1                                      2                               (1)              (54)%

                                                          455                                   462                               (8)                (2)%
                                                          ---                                   ---                               ---

                               Operating
                               income           $84                                    $61                               $23                 37%
                              ----------


    Cable

    Operating revenues

                              Residential      $125                                   $108                               $16                 15%

                              Commercial         27                                     28                               (1)               (3)%

                                                152                                    137                                15                 11%
                                                ---                                    ---                               ---

    Operating expenses

                               Cost of
                               services          73                                     69                                 4                  5%

                               Selling,
                               general and
                               administrative
                               expenses          39                                     37                                 1                  3%


                              Expenses
                               excluding
                               depreciation,
                               amortization
                               and accretion    112                                    107                                 5                  5%

                               Depreciation,
                               amortization
                               and accretion     32                                     27                                 5                 17%

                               (Gain) loss on
                               asset
                               disposals,
                               net                1                                      2                                 -              (24)%

                                                          145                                   136                                 9                   7%
                                                          ---                                   ---                               ---

                               Operating
                               income            $7                                     $1                                $6               >100%
                              ----------


    HMS

    Operating revenues

                               Service
                               revenues         $84                                    $91                              $(6)               (7)%

                               Equipment and
                               product sales     93                                    121                              (28)              (23)%

                                                          178                                   212                              (34)               (16)%
                                                          ---                                   ---                               ---

    Operating expenses

                               Cost of
                               services          63                                     61                                 1                  2%

                               Cost of
                               equipment and
                               products          77                                    101                              (24)              (24)%

                               Selling,
                               general and
                               administrative
                               expenses          32                                     37                               (4)              (12)%


                              Expenses
                               excluding
                               depreciation,
                               amortization
                               and accretion    172                                    199                              (27)              (13)%

                               Depreciation,
                               amortization
                               and accretion     21                                     22                               (1)               (6)%

                               Loss on
                               impairment of
                               goodwill          35                                      -                               35                 N/M

                                                          227                                   221                                 7                   3%
                                                          ---                                   ---                               ---

                              Operating loss  $(50)                                  $(9)                            $(41)            >(100)%
                              ------------


    Intercompany revenues                             $(3)                                 $(3)                       $        -                   -

    Intercompany expenses                             (3)                                  (3)                                -                   -
                                                      ---                                   ---                               ---


    Total TDS Telecom operating
     income                                            $41                                   $53                             $(12)               (23)%
                                                       ===                                   ===                              ====

    N/M - Percentage change not meaningful


    Numbers may not foot due to rounding.


                                                                   Telephone and Data Systems, Inc.

                                                                Financial Measures and Reconciliations



    Free Cash Flow


                                             Three Months Ended                     Nine Months Ended
                                                September 30,                       September 30,

                                                        2017                       2016                 2017   2016

    (Dollars in millions)

    Cash flows from operating
     activities (GAAP)                                                  $263                           $238         $621    $638

    Less: Cash paid for additions
     to property, plant and
     equipment                                                           156                            145          398     426
                                                                         ---                            ---          ---     ---

                        Free cash flow (Non-
                        GAAP)(1)                                            107                             93          223     212
                                                                            ===                            ===          ===     ===

    (1)              Management
                     uses Free
                     cash flow as
                     a liquidity
                     measure and
                     it is
                     defined as
                     Cash flows
                     from
                     operating
                     activities
                     less Cash
                     paid for
                     additions to
                     property,
                     plant and
                     equipment.
                     Free cash
                     flow is a
                     non-GAAP
                     financial
                     measure
                     which TDS
                     believes may
                     be useful to
                     investors
                     and other
                     users of its
                     financial
                     information
                     in
                     evaluating
                     liquidity,
                     specifically,
                     the amount
                     of net cash
                     generated by
                     business
                     operations
                     after
                     deducting
                     Cash paid
                     for
                     additions to
                     property,
                     plant and
                     equipment.

Net income excluding Goodwill impairment charge

The following non-GAAP financial measures present certain information in the table below excluding the effect of the goodwill impairment charge, related tax effects and noncontrolling interests impacts. The goodwill impairment charge, which occurred in the third quarter of 2017, is being excluded in this presentation, as it is not related to the current operations of TDS. TDS believes these measures may be useful to investors and other users of its financial information when comparing the current period financial results with periods that were not impacted by such a charge.



                                                                                                                              Three Months Ended September 30,      Nine Months Ended September 30,

                                                                                                                                       2017                    2016                                    2017  2016

    (Dollars in millions, except per share amounts)

    Net income (loss) available to TDS common                                                                                                    $(181)                                               $13          $(134)     $49

      shareholders (GAAP)


    Adjustments:

                                                       Loss on impairment of goodwill                                                                 262                                                  -            262        -

                                                       Tax benefit on impairment of goodwill(1)                                                      (20)                                                 -           (20)       -

                                                       Net income (loss) attributable to noncontrolling interests, net of tax                        (52)                                                 -           (52)       -


                                                       Total adjustments (Non-GAAP)                                                                   190                                                  -            190        -

    Net income available to TDS common shareholders excluding goodwill impairment charge (Non-
     GAAP)                                                                                                                                           $9                                                $13             $56      $49
                                                                                                                                                    ===                                                ===             ===      ===


    Diluted earnings (loss) per share available to                                                                                              $(1.64)                                             $0.11         $(1.21)   $0.44

      TDS common shareholders (GAAP)

    Adjustments:

                                                       Adjustment to weighted average diluted                                                        0.02                                                  -           0.01        -

                                                         shares(2)

                                                       Loss on impairment of goodwill                                                                2.34                                                  -           2.34        -

                                                       Tax benefit on impairment of goodwill(1)                                                    (0.18)                                                 -         (0.18)       -

                                                       Net income (loss) attributable to noncontrolling interests, net of tax                      (0.46)                                                 -         (0.46)       -


    Diluted earnings per share available to TDS                                                                                                   $0.08                                              $0.11           $0.50    $0.44

      common shareholders excluding goodwill

      impairment charge (Non-GAAP)



    Diluted weighted average shares outstanding                                                                                                     111                                                111             111      111

      (GAAP)

                                                       Adjustment to weighted average diluted                                                           1                                                  -              1        -

                                                         shares(2)


    Adjusted diluted weighted average shares                                                                                                        112                                                111             112      111

      (Non-GAAP)

    (1)              Tax benefit represents the amount
                     associated with the tax-deductible
                     portion of the loss on goodwill
                     impairment.


    (2)              Adjustment to reflect the incremental
                     shares deemed anti-dilutive for GAAP
                     diluted earnings per share.

Postpaid ABPU and Postpaid ABPA

U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment and product sales resulting from the increased adoption of equipment installment plans. Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment and product sales revenues received from customers.



    For the Quarter Ended                                  9/30/2017 6/30/2017  3/31/2017   12/31/2016    9/30/2016

    (Dollars and connection counts in
     millions)

    Calculation of Postpaid ARPU
    ----------------------------

    Postpaid service revenues                                   $586       $597        $608          $607          $635

    Average number of postpaid connections                   4.50       4.47        4.46          4.48          4.49

    Number of months in period                                  3          3           3             3             3

                                            Postpaid ARPU
                                            (GAAP metric)    $43.41     $44.60      $45.42        $45.19        $47.08
                                           =========


    Calculation of Postpaid ABPU
    ----------------------------

    Postpaid service revenues                                $586       $597        $608          $607          $635

    Equipment installment plan billings                       152        142         139           138           131
                                                              ---        ---         ---           ---           ---

                                            Total billings
                                            to postpaid
                                            connections        $738       $739        $747          $745          $766

    Average number of postpaid connections                   4.50       4.47        4.46          4.48          4.49

    Number of months in period                                  3          3           3             3             3

                                            Postpaid ABPU
                                            (Non-GAAP
                                            metric)          $54.71     $55.19      $55.82        $55.43        $56.79
                                           =========


    Calculation of Postpaid ARPA
    ----------------------------

    Postpaid service revenues                                $586       $597        $608          $607          $635

    Average number of postpaid accounts                      1.68       1.66        1.66          1.68          1.69

    Number of months in period                                  3          3           3             3             3

                                            Postpaid ARPA
                                            (GAAP metric)   $116.36    $119.73     $121.88       $120.67       $125.31
                                           =========


    Calculation of Postpaid ABPA
    ----------------------------

    Postpaid service revenues                                $586       $597        $608          $607          $635

    Equipment installment plan billings                       152        142         139           138           131
                                                              ---        ---         ---           ---           ---

                                            Total billings
                                            to postpaid
                                            accounts           $738       $739        $747          $745          $766

    Average number of postpaid accounts                      1.68       1.66        1.66          1.68          1.69

    Number of months in period                                  3          3           3             3             3

                                            Postpaid ABPA
                                            (Non-GAAP
                                            metric)         $146.65    $148.15     $149.78       $148.02       $151.16
                                           =========

View original content:http://www.prnewswire.com/news-releases/tds-reports-third-quarter-2017-results-300551835.html

SOURCE Telephone and Data Systems, Inc.