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Telephone and Data Systems' (TDS) Q4 Earnings Beat Estimates

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Telephone and Data Systems, Inc. (TDS - Free Report) reported healthy fourth-quarter 2021 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.

The TDS family of companies continues to execute on its strategic priorities. U.S. Cellular maintained cost discipline and generated positive momentum in the growth areas of its business. These include Business and Government, Prepaid, Fixed Wireless and tower portfolio. TDS Telecom continued to transform into a leading broadband provider, upgrading speeds and deploying fiber technology in new markets.

Net Income

Net income in the quarter was $31 million or 11 cents per share compared with $14 million or 12 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 7 cents.

In 2021, net income was $156 million or $1.00 per share compared with $226 million or $1.93 per share in 2020.

Revenues

Quarterly total operating revenues inched down 0.3% year over year to $1,372 million. The top line, however, surpassed the consensus estimate of $1,361 million.

In 2021, revenues increased 2% year over year to $5,329 million.

Quarterly Segment Results

U.S. Cellular’s revenues declined 0.5% year over year to $1,068 million due to lower equipment sales. However, the positive impact of postpaid average revenue per user (ARPU) contributed to the growth in retail service revenues. The company’s 5G and network modernization programs are on track while it continues to be optimistic about the performance capabilities of the millimeter-wave spectrum.

Total operating expenses decreased to $1,063 million from $1,069 million. Operating income improved to $5 million from $4 million in the year-ago quarter. Postpaid ARPU improved to $48.62 from $47.51, and average revenue per account grew to $127.14 from $124.87. Prepaid ARPU decreased to $34.53 from $35.15 a year ago.

TDS Telecom’s revenues were $254 million, up 2.4% year over year, driven by growth in broadband connections. The company launched 2Gig broadband speeds in select markets and announced plans to triple the number of fiber service addresses by 2026. In 2022, TDS Telecom will focus on growing its broadband business and aggressively expanding its fiber footprint.

Total operating expenses increased to $231 million from $226 million. Operating income was stable at $23 million. Total connections were 1,199,900 compared with 1,201,100 a year ago. Residential revenue per connection increased to $57.86 from $55.66.

Cash Flow & Liquidity

In 2021, Telephone and Data Systems generated $1,103 million of cash from operating activities compared with $1,532 million in 2020. As of Dec 31, 2021, the company had $367 million in cash and cash equivalents with $2,928 million of long-term debt.

Outlook

Telephone and Data Systems has guided for 2022. It expects total operating revenues at TDS Telecom in the range of $1,010-$1,040 million. Adjusted EBITDA is projected to be $260-$290 million. Adjusted OIBDA is anticipated to be $260-$290 million. Capital expenditures are estimated in the band of $500-$550 million.

At U.S. Cellular, service revenues are expected in the band of $3,100-$3,200 million. The company expects adjusted EBITDA in the range of $925-$1,075 million and adjusted OIBDA within $750-$900 million. Capital expenditures are estimated between $700 million and $800 million.

Zacks Rank & Stocks to Consider

Telephone and Data Systems currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vocera Communications, Inc. (VCRA - Free Report) is a better-ranked stock in the telecom space that sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 4.9% over the past 60 days.

Vocera Communications pulled off a trailing four-quarter earnings surprise of 115.4%, on average. The stock has returned 73.7% in the past year.

SeaChange International, Inc. (SEAC - Free Report) carries a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised upward by 10% over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has, however, declined 15.5% in the past year.

Qualcomm, Inc. (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick for investors. The consensus estimate for current-year earnings has been revised 12.2% upward over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 12.2%, on average. It has appreciated 15.1% in the past year.