Telephone and Data Systems, Inc.

Good morning and welcome to TDS and U.S. Cellular's fourth quarter 2023 operating results conference call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Colleen Thompson, Vice President of Corporate Relations. Thank you. Please go ahead.

Good morning, and thank you for joining us. We want to make you all aware of the presentation we have prepared to accompany our comments this morning, which you can find on the investor relations sections of the TDS and U.S. Cellular websites. With me today and offering prepared comments are from TDS, Vicky Villacrez, Executive Vice President and Chief Financial Officer. From U.S. Cellular, LT Thurowal, President and Chief Executive Officer. Doug Chambers, Executive Vice President, Chief Financial Officer and Treasurer, and from TDS Telecom, Michelle Brokwicki, Senior Vice President of Finance and Chief Financial Officer. This call is being simultaneously webcast on the TDS and U.S. Cellular Investor Relations website. Please see the websites for slides referred to on this call, including 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. PDS and U.S. Cellular filed their SEC Forms 8-K, including the press releases and our 10-Ks earlier this morning. As shown on slide two, the information set forth in the presentation and discussed during this call contains 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 version included in our SEC filings. And with that, I will now turn the call over to Vicki Villacruz. Vicki?

Okay. Thank you, Colleen, and hello, everyone. I hope you are doing well. This morning, we'll take a quick look back at last year and also share with you our 2024 priorities and goals. 2023 was a challenging year for the organization, yet the teams navigated it well and we ended the year in a good place as we move into 2024. Before we get into the details, I want to reiterate that as we announced on August 4th last year, we've embarked on a review of the strategic alternatives at U.S. Cellular. We're not going to comment on the process today except to say that it remains ongoing. and that management of TDS and US Cellular, along with both boards, are committed to a path that is in the best interest of the company and our shareholders. Given the nature of the process, we do not expect to have updates until it is concluded. Now let's talk about the business. In 2023, we continue to make substantial investments in our businesses in order to improve our competitiveness while enhancing the customer experience. Over the last two years, TDS Telecom invested heavily and increased its total footprint by 21%, setting it up for strong top and bottom line growth, as evidenced by Telecom's guidance for 2024. U.S. Cellular has made progress on its 5G rollout and expects to continue investing in mid-band deployment throughout 2024. U.S. Cellular also modestly delevered in 2023 and will continue to balance ongoing investments with the need to generate positive free cash flow. While reinvesting still remains a high priority, given the interest rate environment and high cost of debt, we plan on slowing our CapEx investments for TDS Telecom in 2024, as you can see in our guidance. Despite the high interest rate environment, TDS's weighted average cost of debt and preferred equity is 6.5%. We believe that we have the right mix of both long-term maturities and shorter-term financings to help fund our investments while appropriately managing through the current interest rate environment. We ended the year maintaining access to liquidity, and we have a sizable amount of debt that isn't due for quite some time. I also want to note that in the fourth quarter, TDS Telecom took a $547 million non-cash goodwill impairment charge in conjunction with our annual goodwill assessment. This charge was due to a combination of factors, primarily rising interest rates and competitive pressures in our ILEC legacy markets. The non-cash charge eliminates all the goodwill at TDS Telecom and does not impact reported adjusted EBITDA or adjusted OIBIDDA. From a consolidated enterprise perspective, I'm pleased that we are maintaining rigorous cost discipline programs, focusing on both OPEX and CAPEX, which led to moderate full year 2023 increases and adjusted EBITDA and reduced capital expenditures. And at the same time, allocating our capital towards critical network investments. Before I turn the call over, as you probably saw earlier today, TDS announced its first quarter dividend, raising the rate modestly from 2023 as we balance the needs of our businesses and returns to our shareholders. I'd also like to take a moment to thank all of our associates for their exceptional hard work and dedication in these dynamic times. We are positioned well to execute against our priorities for 2024. And with that, I'll now turn the call over to LT.