TDS believes transaction delivers significant
value to UScellular customers and shareholders
TDS announces second quarter 2024
dividends
TDS and UScellular to hold conference call at
8:30 a.m. Central Time
CHICAGO, May 28, 2024
/PRNewswire/ -- Telephone and Data Systems, Inc. ("TDS") (NYSE:
TDS) today indicated its board of directors unanimously approved
the definitive agreement reached by TDS and United States Cellular
Corporation ("UScellular") (NYSE: USM) to sell UScellular's
wireless operations and approximately 30% of its spectrum
assets to T-Mobile for a purchase price of $4.4 billion, including a combination of cash and
up to approximately $2 billion of
assumed debt. The agreement follows the thorough strategic
review process announced in August
2023.
"Over the past four decades, TDS has supported the growth and
development of UScellular, its wireless business and the company's
mission to connect people to what matters most. Continuing to
deliver for UScellular's customers requires a level of scale and
investment that is best achieved by integrating its wireless
operations with those of T-Mobile. We are confident that T-Mobile
is the right partner and now is the right time to divest the
operations," said Walter C. D.
Carlson, Chair of the TDS Board. "T-Mobile's robust
capabilities and offerings will enhance service, choice, and value
for UScellular's wireless customers, while the financial terms will
deliver significant shareholder value and position UScellular with
a healthy balance sheet and a transformed tower infrastructure
business poised for strong growth and value creation."
In addition to the sale of the wireless operations and select
spectrum assets for $4.4 billion in
cash and assumed debt, and the considerable benefits to customers
as a result of the transaction, UScellular will benefit from the
potential to opportunistically monetize the retained spectrum,
which represents approximately 70% of total spectrum assets across
several spectrum bands. UScellular's tower assets will represent
one of the largest tower businesses in the United States, and following the
transaction, T-Mobile will be a long-term tenant on a minimum of
2,015 incremental towers owned by UScellular, and extend the lease
term for the approximately 600 towers where T-Mobile is already a
tenant. This will ensure continued, uninterrupted service for
UScellular customers and create a long-term contracted revenue
stream from a strong anchor tenant for at least 15 years after the
close of the transaction. UScellular also retains its significant
equity method investment interests, primarily from its wireless
partnerships, that generated $158
million of equity method income and $150 million in distributions in 2023.
While decisions regarding the distribution of proceeds from the
sale of the wireless operations will be determined solely by the
UScellular board of directors, TDS will receive such proceeds in
proportion to its ownership of UScellular. To the extent cash
distributions are made to UScellular shareholders, including from
proceeds, if any, related to the monetization of retained spectrum
assets, TDS will utilize such proceeds in the best interests of its
shareholders. Depending on the amount of proceeds, those uses are
expected to include continuing to invest in the company's fiber
build-out program and reducing leverage levels, and may include
return of capital to shareholders and the pursuit of other
opportunities to grow the business.
Carlson continued, "As UScellular works to complete this
transaction, TDS remains committed to executing on our strategy to
grow our fiber footprint while increasing broadband penetrations
and improving profitability. This includes bringing fiber to small
and mid-sized, suburban and rural communities across the United States."
Other Transaction Details
TDS, in its role as the 83 percent shareholder of UScellular,
has delivered its written consent approving the transaction. The
transaction is expected to close in mid-2025, subject to the
receipt of regulatory approvals and the satisfaction of customary
closing conditions.
For more information, please refer to the release filed today by
UScellular, which can be accessed in UScellular's website
at https://investors.uscellular.com.
Advisors
Citigroup Global Markets Inc. is serving as lead financial
advisor, Centerview Partners LLC is serving as financial advisor
and Sidley Austin LLP is serving as lead legal advisor to TDS. TD
Securities (USA) LLC and Wells
Fargo are also serving as financial advisors to TDS for the
transaction. PJT Partners LP is serving as financial advisor and
Cravath, Swaine & Moore LLP is serving as legal advisor to the
independent directors of UScellular. Clifford Chance LLP and
Wilkinson Barker Knauer, LLP are also serving as legal advisors to
UScellular and TDS for the transaction.
Capital Allocation Strategy and Dividends
TDS remains confident in its plans to drive growth and create
value by investing in fiber expansion. To support those plans, TDS
is resetting its approach to capital allocation. Specifically, the
Board has declared dividends for the second quarter 2024 at
approximately 20% of the previous level for its Common Shares and
Series A shares. This shift in approach is expected to free up
additional capital that can be used to support the company's fiber
program, among other purposes. No changes are anticipated in the
dividends to be paid on the Series UU and Series VV preferred
shares.
TDS is paying a quarterly dividend of $0.04 per Common Share and Series A Common Share
payable on June 28, 2024, to holders
of record on June 14, 2024.
TDS is paying a quarterly dividend of $414.0625 per share on the company's 6.625%
Series UU Preferred shares; holders of depositary shares will
receive $0.4140625 per depositary
share payable on July 1, 2024, to
holders of record on June 15,
2024.
TDS is paying a quarterly dividend of $375.0000 per share on the company's 6.000%
Series VV Preferred shares; holders of depositary shares will
receive $0.3750000 per depositary
share payable on July 1, 2024, to
holders of record on June 15,
2024.
The tickers for the TDS Common shares is "TDS", the Series UU
depositary shares is "TDSPrU" and the Series VV depositary shares
is "TDSPrV".
Conference Call Information
TDS and UScellular will hold a joint conference call on
May 28, 2024, at 8:30 a.m. Central Time.
- Access the live call on TDS Events & Presentations or
UScellular Events & Presentations or
at https://events.q4inc.com/attendee/598119900
- Access the call by phone at (800) 715-9871 (U.S./Canada), conference ID: 2264212
Before the call, information to be discussed during the call
will be posted to TDS Events & Presentations. The call will be
archived on TDS Events & Presentations and UScellular Events
& Presentations.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company,
provides wireless; broadband, video and voice; and hosted and
managed services to approximately 6 million connections nationwide
through its businesses, UScellular, TDS Telecom, and OneNeck IT
Solutions. Founded in 1969 and headquartered in Chicago, TDS employed approximately 8,600
associates as of March 31, 2024.
Visit investors.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: 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 about the consummation and benefits of
the proposed transactions, including anticipated synergies, and
T-Mobile's, UScellular's and TDS' plans, objectives, expectations
and intentions, and the expected timing of completion of the
proposed transaction. These statements are based on current plans,
estimates, projections, and assumptions, and the anticipated timing
of completion of the proposed transactions, which involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Important
factors that may affect these forward-looking statements include,
but are not limited to: the failure to obtain, or delays in
obtaining, required regulatory approvals and the risk that such
approvals may be conditioned upon or result in the imposition of
terms or conditions that could adversely affect the expected
benefits of the proposed transaction; the failure to satisfy any of
the other conditions to the proposed transaction on a timely basis,
or at all; the occurrence of events that may allow one or more
parties to terminate the definitive agreement; the adverse effects
on TDS', UScellular's or T-Mobile's common stock and on TDS',
UScellular's or T-Mobile's operating results because of a failure
to complete the proposed transactions in the anticipated timeframe
or at all; adverse changes in the ratings of TDS', UScellular's or
T-Mobile's debt securities or adverse conditions or disruptions in
the financial or credit markets; negative effects of the
announcement, pendency or consummation of the transaction on TDS'
or UScellular's operating results, including as a result of changes
in key customer, supplier, employee or other business
relationships; significant transaction costs and unknown
liabilities; failure to realize the expected benefits and synergies
of the proposed transaction in the expected timeframes or at all;
costs or difficulties related to the integration of UScellular's
network and operations into T-Mobile's; the risk of litigation or
regulatory actions, including antitrust litigation; the risk that
certain contractual restrictions contained in the definitive
agreement during the pendency of the proposed transaction could
adversely affect TDS' or UScellular's ability to pursue business
opportunities or strategic transactions; effects of changes in the
state or federal regulatory environment in which TDS, UScellular
and T-Mobile operate; intense competition; the ability of
UScellular to obtain or maintain leases for its towers; the ability
of TDS, UScellular and T-Mobile to retain and attract people of
outstanding talent throughout all levels of the organization;
'advances in technology; impacts of costs, integration problems or
other factors associated with expansion of TDS' businesses; the
ability of UScellular to successfully construct and manage its
towers; difficulties involving third parties with which TDS and
UScellular does business; uncertainties in TDS' and UScellular's
future cash flows and liquidity and access to the capital markets;
the ability to make payments on TDS and UScellular indebtedness or
comply with the terms of debt covenants; changes in tax rules or
pronouncements; inability to timely and successfully execute on its
fiber expansion plans or to realize significant incremental revenue
from its deployment; the possibility that the Board of Directors of
TDS or UScellular will not declare dividends; conditions in the
U.S. telecommunications industry; the value of assets and
investments; pending and future litigation; cyber-attacks or other
breaches of network or information technology security; control by
the TDS Voting Trust; deterioration of U.S. or global economic
conditions; unpredictability and severity of catastrophic events,
including but not limited to acts of terrorism, war or hostilities,
as well as management's response to any of the aforementioned
factors; and the impact, duration and severity of public health
emergencies. Investors are encouraged to consider these and other
risks and uncertainties that are more fully described under "Risk
Factors" in the most recent filing of TDS' Form 10-K.
Additional Information and Where to Find It
UScellular will prepare an information statement on Schedule 14C
for its shareholders with respect to the transaction described
herein. When completed, the information statement will be delivered
to UScellular's shareholders. You may obtain copies of all
documents filed by UScellular with the SEC regarding this
transaction, free of charge, at the SEC's website, www.sec.gov or
from UScellular's website at https://investors.uscellular.com.
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SOURCE Telephone and Data Systems, Inc.
