Transcript leroy t. carlson, jr.

John E. Rooney
President and CEO, U.S. Cellular
LeRoy T. Carlson, Jr.
President and CEO, TDS
Smith Barney Citigroup 15th Annual Entertainment,
Media & Telecommunications Conference
January 10, 2005
Safe Harbor
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 and projections,
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 forwardlooking statements include, but are not limited to: changes in circumstances or events that may
affect the ability of USM to start up the operations of the licensed areas involved in the AT&T
Wireless transaction completed in August 2003; the ability of U.S. Cellular to successfully
manage and grow the operations of the Chicago MTA and newly launched markets; changes in
the overall economy; changes in competition in the markets in which TDS and U.S. Cellular
operate; advances in telecommunications technology, including Voice over Internet Protocol; the
impact of local number portability; changes to access and pricing of unbundled network
elements; changes in the telecommunications regulatory environment; changes in the value of
investments, including variable prepaid forward contracts; changes in the capital markets that
could adversely impact the availability, cost and terms of financing; an adverse change in the
ratings afforded TDS and U.S. Cellular debt securities by nationally accredited ratings
organizations; pending and future litigation; acquisitions/divestitures of properties and/or
licenses; and changes in customer growth rates, average monthly service revenue per unit,
churn rates, roaming rates and the mix of products and services offered in TDS and U.S.
Cellular markets. Investors are encouraged to consider these and other risks and uncertainties
that are discussed in documents filed by TDS and USM with the Securities and Exchange
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Commission.
U.S. Cellular
as of 9/30/04
• 7th largest wireless service provider; 2nd largest
regional carrier
• Total population - 45.6 million
• 4.8 million customers
• 10.6% market penetration
• Focused on exceptional customer experience
• Admirably low churn rate
• Pervasive distribution… 2,300 points of presence
• Extensive network ... 4,713 cell sites
• Well positioned in our markets
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Postpay Churn < 2%
Six-year track record… and still strong
2.0%
1.9%
1.9%
1.8%
1.9%
1.8%
1.8%
1.7%
1.7%
1.5%
1.6%
1.5%
1.6%
1.5%
1.4%
1.3%
1.3%
1.2%
1.1%
1.0%
1998 1999
2000
2001 2002
2003 Q1 '04 Q2'04 Q3'04
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U.S. Cellular Strategy
• Positioned as a regional carrier
• Differentiate with exceptional customer service
 Network quality
 Broad distribution
 Dedicated people
• Deploy CDMA 1X technology in all markets
• Strategically strengthen regional footprint
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Strengthening the Footprint
• Sold Daytona Beach to MetroPCS – Dec. 2004
• Sold two small markets and investment
interests to ALLTEL – Dec. 2004
• Sold South Texas markets to AT&T Wireless –
Feb. 2004
• Exchanged wireless properties with AT&T
Wireless – Aug. 2003
• Acquired Chicago market – Aug. 2002
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Chicago Update
• Brand awareness up substantially
• Market share up year-over-year
• Top-notch network
• Increased distribution points
• Rated top carrier for service quality
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AWE Property Exchange
Improved competitive position in Midwest and Northeast markets
• Announced March 2003, closed Aug. 2003
• Excellent fit with USM’s strategy:

Strengthen regional footprint through
acquisitions or trades
 Build on strengths and exit other markets
• Have built out and launched 3 markets:
Oklahoma City; Lincoln, NE; and Portland, ME
 Expect to launch Missouri markets in late 2005
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Divestitures
Exited markets not strategic to company’s long-term success
• South Texas to AWE - Feb. 2004; $97 M
• 25 MHz licenses; 1.3 M pops, 150 cell sites and
76,000 customers
• High prepaid mix and heavy roaming market
• Alltel sale - Dec. 2004; $81 M
• Two 25 MHz operating markets in FL and OH
• Seven small investment interests in Ohio, N.C.,
Miss., Wis. – 268,000 pops
• Daytona Beach to MetroPCS - Dec. ’04; $8.5 M
• 20 MHz Block C license
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CDMA 1X Initiative
• Improved voice capacity and coverage;
cost-effective use of wireless spectrum
• Enables offering of high-speed data products
• Recently completed the 3-year project
• Ahead of schedule, below planned cost
• Total cost to build CDMA ... ≈ $300 million
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Data – easyedgeSM
• easyedgeSM Download Applications – (BREWTM)
• Applications; games; news; traffic; calendar
• Launched nwebSM Nov. 17 – enables Internet access
• easyedgeSM Picture Messaging – (MMS)
• Take, send or receive photos
• easyedgeSM Wireless Modem Service
• Wireless Internet access for laptops; e-mail; calendar
• Available in select areas to business customers
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Financing Activities
Over the last 12 months, we have:
• Redeemed:
• $163.3 M of LYONS
• $250 M of 7.25% notes due 2007
• Sold:
• $330 M 30-year 7.5% notes
• $544 M 30-year 6.7% notes in two tranches
• Amended existing $325 million revolver and
increased to $700 M through December 2009
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USM: Excellent Prospects
• Proven Strategy
• Financially Strong
• Extensive network
• Terrific people; dynamic organization
• Positive momentum
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LEROY T. CARLSON, JR.
TDS
• Diversified telecommunication company with
nearly 6 million customers in 36 states
• U.S. Cellular (82% owned) - wireless
• TDS Telecom (100% owned) – wireline
• ILEC and CLEC operations
• Fortune 500 company
• Strong balance sheet
• Investment grade
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TDS Telecom - ILEC
• 7th largest independent U.S. telco
• Rural company status
• 725,500 access line equivalents in 28 states
• 104,800 Internet (dial-up) accounts;
• 33,000 DSL – mostly residential
• 289,000 long distance lines
• Vertical services
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TDS Telecom - CLEC
• Principally a facilities-based company in
five states …87% on-switch
• 412,500 access line equivalents
• Targeted selling to business and
communications-intensive residential
• Deep penetration in chosen markets
• Provisions principally with one RBOC (SBC)
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TDS Telecom’s Overall Strategy
Repositioning into a Broadband Communications Company
• Provide outstanding customer service
• Protect and grow current markets
• Develop and market new products
and services, with strong focus on
data and triple-play
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Strategic Areas of Focus
• Market Development
• Market Fortification
• Public Policy Advocacy
• Process & Productivity
Improvement
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Market Development
• Grow in clusters through potential
combination of:
• Acquisitions
• Build-out variations
• New technologies
• Trialing:
• Fiber to the Premise (FTTP)
• Voice Over IP (VOIP)
• Wireless data
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Market Fortification
• Proactively address substitution
technologies by:
• Developing new products and services
• Enhancing existing services; increasing
market share, penetration and profitability,
particularly of high-speed data services
• Growing the CLEC within its existing
markets
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DSL Facts - ILEC
• 78 markets, 33,000 customers, fast growth
• DSL lines – up 71% YOY Q3 2004
• Primarily consumer based
• Product bundles:
• DISH satellite / DSL; long distance / DSL, etc.
• DSL modems Wi-Fi enabled
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Public Policy Advocacy
• Champion TDS’s position to ensure
favorable regulatory treatment
• Telecom regulatory environment complex and
convoluted
• Several key issues currently under review
• Universal Service Fund
• Inter-carrier compensation
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Productivity Improvement
• Create efficiencies by optimizing
cross- functional processes
• Leveraging management and process
infrastructures to jointly support ILEC and
CLEC operations
• Pursuing cost-effective initiatives, such as
innovative online purchasing system
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TDS - Financial Strategies
• Ultimate goal: generate profitable growth
and build shareholder value
• Four financial objectives toward that goal:
• 10-15% compound annual revenue growth rate
over five years
• Return cost of capital in each business
• Generate shareholder returns > comparable
companies
• Target A- investment-grade credit rating
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TDS: Excellent Prospects
• Full-service provider with strong, established
wireless and wireline operations
• Strong business units
• Well positioned in existing markets
• Proven business strategies focused on
customer satisfaction, network quality and
competitive product offerings.
• Experienced management teams
• Financially strong
• Dedicated workforce of 11,200 people
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