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Telephone and Data Systems (TDS) Q4 Loss Narrower Than Expected
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Telephone and Data Systems, Inc. (TDS - Free Report) reported healthy fourth-quarter 2023 results, with the top and the bottom line beating the respective Zacks Consensus Estimate. Declining net sales in the U.S. Cellular segment led to a revenue decline year over year during the quarter. However, growth in total broadband connections partially supported the top line. TDS Telecom delivered 217,000 fiber service addresses, exceeding its fiscal 2023 fiber address target. It expanded its fiber broadband footprint by 12%, increasing total service addresses to 1.7 million.
Net Income
The company reported a net loss of $12 million or a loss of 11 cents per share compared with a net loss of $43 million or a loss of 38 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.
In 2023, the company reported net loss of $59 million or a loss of 53 cents compared with a loss of $8 million or a loss of 7 cents in the previous year.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Net sales in the December quarter were $1.31 billion, down from $1.35 billion reported in the year-ago quarter, owing to declining revenues from the U.S. Cellular segment. The top line beat the Zacks Consensus Estimate by $29 million.
In 2023, TDS reported total operating revenues of $5.16 billion, down from $5.41 billion in 2022.
Revenues from U.S. Cellular were $1 billion, down 5% year over year. A reduction in postpaid retail and prepaid connections impeded the top line. However, growth in fixed wireless customers and tower revenues are tailwinds. Net sales surpassed our revenue estimate of $975.9 million.
Total cash expenses stood at $812 million, down from $885 million in the prior-year quarter. Operating income rose to $21 million from an operating loss of $27 million in the year-ago quarter. Postpaid average revenues per user (ARPU) rose to $51.61 from $50.60. Postpaid average revenues per account increased to $131.63 from $130.97 in the year-ago quarter. Prepaid ARPU was $32.32, down from $33.34 in the prior-year quarter.
TDS Telecom contributed $261 million to revenues compared with $257 million reported in the prior-year quarter. The top line fell short of our revenue estimate of $268.2 million. Total residential connections stood at 952,900, up from 936,000 in the year-earlier quarter. Residential revenues per connection were $62.74, up 5% year over year from $59.91 in the prior-year quarter.
Total cash expenses were $186 million, down 4% year over year. Around 16% of customers opted for 1 Gigabit+ speed compared with the previous-year quarter’s tally of 11%. About 51% of the users have chosen 100 Mbps or higher speed compared to 53% in the year-earlier quarter. It’s Wireline, Expansion rose to 92,200 from 56,100 a year ago. Total connections stood at 1,163,100 compared with 1,173,000 in the year-ago quarter.
Other Details
The company’s operating loss was $524 million compared with a loss of $26 million in the year-ago period. Loss on impairment of goodwill was $547 million, which significantly affected the operating income in the TDS Telecom segment.
Adjusted EBITDA in TDS Telecom came at $78 million, up 19% year over year, backed by lower cash expenses. Adjusted EBITDA for U.S. Cellular witnessed an improvement of 16% to $233 million compared with the prior-year quarter’s figure of $202 million.
Cash Flow & Liquidity
In the fourth quarter of 2023, Telephone and Data Systems generated $218 million of net cash from operating activities compared with $255 million in the prior-year quarter. In 2023, the company generated $1.14 billion in cash compared with $1.15 billion in 2022.
As of Dec 31, 2023, the company had $236 million in cash and cash equivalents, with $4.08 billion of long-term debt compared with the previous year’s tally of $360 million and $3.73 billion, respectively.
Outlook
For 2024, management expects total operating revenues at TDS Telecom in the range of $1.07-$1.1 billion. Adjusted EBITDA is estimated in the band of $310-340 million. Adjusted OIBDA (non-GAAP) is expected to be $310-340 million. Capital expenditures are expected in the range of $310-340 million.
Service revenues for U.S. Cellular are expected in the range of $2.95-$3.05 billion. The company expects the adjusted EBITDA in the range of $920-$1,020 million. Adjusted OIBDA is projected at $750-$850 million. Capital expenditure is projected in the band of $550-$650 million.
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Telephone and Data Systems (TDS) Q4 Loss Narrower Than Expected
Telephone and Data Systems, Inc. (TDS - Free Report) reported healthy fourth-quarter 2023 results, with the top and the bottom line beating the respective Zacks Consensus Estimate. Declining net sales in the U.S. Cellular segment led to a revenue decline year over year during the quarter. However, growth in total broadband connections partially supported the top line. TDS Telecom delivered 217,000 fiber service addresses, exceeding its fiscal 2023 fiber address target. It expanded its fiber broadband footprint by 12%, increasing total service addresses to 1.7 million.
Net Income
The company reported a net loss of $12 million or a loss of 11 cents per share compared with a net loss of $43 million or a loss of 38 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.
In 2023, the company reported net loss of $59 million or a loss of 53 cents compared with a loss of $8 million or a loss of 7 cents in the previous year.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Telephone and Data Systems, Inc. price-consensus-eps-surprise-chart | Telephone and Data Systems, Inc. Quote
Revenues
Net sales in the December quarter were $1.31 billion, down from $1.35 billion reported in the year-ago quarter, owing to declining revenues from the U.S. Cellular segment. The top line beat the Zacks Consensus Estimate by $29 million.
In 2023, TDS reported total operating revenues of $5.16 billion, down from $5.41 billion in 2022.
Revenues from U.S. Cellular were $1 billion, down 5% year over year. A reduction in postpaid retail and prepaid connections impeded the top line. However, growth in fixed wireless customers and tower revenues are tailwinds. Net sales surpassed our revenue estimate of $975.9 million.
Total cash expenses stood at $812 million, down from $885 million in the prior-year quarter. Operating income rose to $21 million from an operating loss of $27 million in the year-ago quarter. Postpaid average revenues per user (ARPU) rose to $51.61 from $50.60. Postpaid average revenues per account increased to $131.63 from $130.97 in the year-ago quarter. Prepaid ARPU was $32.32, down from $33.34 in the prior-year quarter.
TDS Telecom contributed $261 million to revenues compared with $257 million reported in the prior-year quarter. The top line fell short of our revenue estimate of $268.2 million. Total residential connections stood at 952,900, up from 936,000 in the year-earlier quarter. Residential revenues per connection were $62.74, up 5% year over year from $59.91 in the prior-year quarter.
Total cash expenses were $186 million, down 4% year over year. Around 16% of customers opted for 1 Gigabit+ speed compared with the previous-year quarter’s tally of 11%. About 51% of the users have chosen 100 Mbps or higher speed compared to 53% in the year-earlier quarter. It’s Wireline, Expansion rose to 92,200 from 56,100 a year ago. Total connections stood at 1,163,100 compared with 1,173,000 in the year-ago quarter.
Other Details
The company’s operating loss was $524 million compared with a loss of $26 million in the year-ago period. Loss on impairment of goodwill was $547 million, which significantly affected the operating income in the TDS Telecom segment.
Adjusted EBITDA in TDS Telecom came at $78 million, up 19% year over year, backed by lower cash expenses. Adjusted EBITDA for U.S. Cellular witnessed an improvement of 16% to $233 million compared with the prior-year quarter’s figure of $202 million.
Cash Flow & Liquidity
In the fourth quarter of 2023, Telephone and Data Systems generated $218 million of net cash from operating activities compared with $255 million in the prior-year quarter. In 2023, the company generated $1.14 billion in cash compared with $1.15 billion in 2022.
As of Dec 31, 2023, the company had $236 million in cash and cash equivalents, with $4.08 billion of long-term debt compared with the previous year’s tally of $360 million and $3.73 billion, respectively.
Outlook
For 2024, management expects total operating revenues at TDS Telecom in the range of $1.07-$1.1 billion. Adjusted EBITDA is estimated in the band of $310-340 million. Adjusted OIBDA (non-GAAP) is expected to be $310-340 million. Capital expenditures are expected in the range of $310-340 million.
Service revenues for U.S. Cellular are expected in the range of $2.95-$3.05 billion. The company expects the adjusted EBITDA in the range of $920-$1,020 million. Adjusted OIBDA is projected at $750-$850 million. Capital expenditure is projected in the band of $550-$650 million.
Zacks Rank & Stocks to Consider
TDS currently carries a Zacks Rank #4 (Sell).
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NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 170.71%. In the last reported quarter, it delivered an earnings surprise of 78.99%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 13.28%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.