Telephone and Data Systems, Inc.

Good morning. My name is Suzanne, and I will be your conference operator today. At this time, I would like to welcome everyone to the TDS U.S. Cellular First Quarter 2020 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you're using a mobile device, please take your device off speakerphone in order to properly queue up for a question. If you would like to withdraw your question, please press the pound key. Thank you. Ms. Jane McCain, you may begin your conference.

Thank you, Suzanne, and good morning, and thank you, everyone, for joining us. We want to send out our very best wishes that you and your families are well. We've worked hard to prepare our materials and remarks today to share with you about the strength of our businesses and provide insight into what we believe will be the most significant opportunities and challenges we'll face in the coming months. Please continue to provide us feedback about what we can do to provide timely and important information. Now back to the normal script. I want to make you all aware of the presentation we've prepared to accompany our comments this morning, which you can find on the investor relations sections of the TDS and US Cellular websites. With me today, from all corners of the world, and offering prepared comments, From TDS, Pete Cereta, Executive Vice President and Chief Financial Officer. From U.S. Cellular, Ken Myers, President and Chief Executive Officer. Doug Chambers, Senior Vice President and Chief Financial Officer. And from TDS Telecom, Vicki Villacrez, Senior Vice President of Finance and Chief Financial Officer. This call is being simultaneously webcast on the TDS and U.S. Cellular Investor Relations websites. Please see those websites for slides referred to on this call, including our non-GAAP reconciliations. We provide guidance for both adjusted operating income before depreciation and amortization, or OIBDA, and adjusted earnings before interest taxes depreciation and amortization, or EBITDA, to highlight the contributions of U.S. Cellular's wireless partnerships. As is shown on slide two, the information set forth in the presentation and discussed during this call contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Please review the Safe Harbor paragraphs in our press releases and the extended versions included in our SEC filings. We have updated our Safe Harbor statements to include specific risks related to COVID-19 and its impact on our businesses and have provided that here specifically on slide three. TDS and U.S. Cellular filed their FCC Forms 8K including press releases and Forms 10Q yesterday. In terms of our upcoming IR schedule on slide four, we'll be virtually attending the JPMorgan Global Technology Media and Communications Conference on May 12th. And our open door policy is now more of an open phone or open video policy, so please reach out to us if you'd like to arrange a meeting. and now I'd like to turn the call over to Pete Cerato. Pete?

Thanks, Jane, and good morning, everyone. Our mission at TDS from our founding 50 years ago has always been to provide outstanding communication services to our customers and meet the needs of our shareholders, our employees and our communities. And I think now, more than ever, we all recognize the importance and responsibility of providing critical communications and data services that our customers and communities depend on. I'll start on slide five. First, in order to serve our customers, we've continued to invest in our networks to ensure that we can meet their increased data and usage demands. And now, with work at home and remote learning, these investments are proving to be critical. To keep our customers connected to these essential services, both US Cellular and PDS Telecom have signed the SEC's pledge not to turn off service or charge late fees due to a customer's inability to pay their bill because of circumstances related to COVID-19. We're also grateful to our employees for their dedication in serving our customers, and we recently enacted a number of programs such as work at home, social distancing, and additional cleaning to protect them and their families. And for our stockholders and our debt holders, to support our long-term sustainability goals, we've always strived to be financially conservative. Turning to slide six. Maintaining financial flexibility through a strong balance sheet is one of the pillars of our corporate strategy. and over the years we have worked to retain relatively low leverage levels, long-dated debt maturities, sufficient undrawn revolving credit facilities and significant cash balances while at the same time making sure we have the financial resources we need to fund our businesses. As you can see on the slide, on March 31st, TDS had nearly $1.5 billion in available funding sources including cash and cash equivalents, available credit facilities, a mostly undrawn term loan and an undrawn EIP securitization facility. We also have a number of other potential sources, including our own towers and wireless partnerships. As you can see, most of our debt is very long-dated. Turning to slide seven, I also wanted to highlight some recent liquidity initiatives and anticipated tax benefits. We had completed all of our financing initiatives for 2020 prior to the onset of the COVID-19 outbreak, so we are not in a position of having to complete any financings currently. We have been advised by our banks that the debt markets have opened up sufficiently such that we would be able to raise new money if the need arose, although we do not currently see such a need. Since the impacts of the COVID-19 outbreak began to be felt by the overall economy and our businesses, monitoring cash activity and balances and a number of other metrics more closely, we have not detected any meaningful degradation in our cash flows. have considered generally drawing down on our existing credit facilities but have determined that it is not necessary at this time as we have sufficient liquidity to run our businesses. Our business trends do not currently indicate that we are in danger of violating any bank covenants. Financial strength of our credit banks is very strong. However, as previously planned, TDS recently drew $50 million under its $200 million delayed draw term loan to fund capital expenditures at TDS Telecom. and U.S. Cellular for the first time, and as previously planned, borrowed $125 million on its EIP securitization facility in order to pay for the Spectrum purchase in Auction 103. And because both stock prices were at very depressed levels during the quarter, purchase stock at both companies in a measured fashion, balancing the market opportunity to buy in shares at extremely favorable prices with the requirement that we preserve liquidity, in case the current general economic situation becomes worse than we currently anticipate. Lastly, due to the CARES federal tax legislation, we had a low effective tax rate in the quarter, and we project a reduction of income tax expense throughout the remainder of 2020 as a result of an anticipated tax refund in 2021. I will now turn over the call to Ken Myers. Ken?