TDS Reports 4% Decline in Q3 Revenues, Net Loss Widens Amid Wireless Challenges

Telephone and Data Systems, Inc. (TDS) reported its financial results for the third quarter and nine months ended September 30, 2024, revealing significant challenges in revenue and profitability compared to the previous fiscal period. The company’s total operating revenues for Q3 2024 were $1,224 million, a decrease of 4% from $1,278 million in Q3 2023. For the nine months ended September 30, 2024, total revenues also fell by 3% to $3,724 million from $3,848 million in the prior year.

UScellular, TDS's 83%-owned subsidiary, experienced a 4% decline in operating revenues for both the three and nine months ended September 30, 2024, reporting $922 million and $2,799 million, respectively. This decline was attributed to lower average postpaid and prepaid connections, compounded by competitive pressures from traditional carriers and cable wireless companies. Operating expenses for UScellular increased by 12% to $1,012 million in Q3 2024, leading to an operating loss of $90 million, compared to an operating income of $57 million in Q3 2023.

The net loss attributable to TDS common shareholders for Q3 2024 was $83 million, worsening from a loss of $17 million in the same quarter of 2023. For the nine-month period, the net loss increased to $86 million from $46 million in the prior year. A significant factor contributing to these losses was a non-cash impairment charge of $136 million related to UScellular's wireless spectrum licenses, reflecting industry-wide challenges in operationalizing high-band spectrum.

In terms of strategic developments, TDS has initiated a planned disposal of UScellular's wireless operations, which has led to a restructuring of its reporting segments into Wireless and Towers. This strategic shift is expected to impact future financial performance and operational focus. TDS has also entered into agreements to sell certain assets, including a transaction with T-Mobile for $4,400 million, anticipated to close in mid-2025, and a separate agreement with Verizon for $1,000 million.

Despite these challenges, TDS Telecom, TDS's wholly-owned subsidiary, reported a 2% increase in total operating revenues for Q3 2024, reaching $263 million, driven by price increases and growth in broadband connections. Adjusted EBITDA for TDS Telecom increased by 21% to $83 million for the quarter.

Overall, TDS's financial performance reflects a complex landscape marked by declining revenues in its wireless segment, strategic asset sales, and ongoing competitive pressures, alongside some growth in its telecom services.