TELEPHONE DATA SYSTEMS INC DE

TDS operates a capital-intensive business. TDS makes substantial investments to acquire wireless spectrum licenses and properties and to construct and upgrade communications networks and facilities with a goal of creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to TDS’ networks. Revenues from certain of these investments are long-term and in some cases are uncertain. To meet its cash-flow needs, TDS may need to delay or reduce certain investments, dividend payments or sell assets. Refer to Liquidity and Capital Resources within this MD&A for additional information. Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, timing and other factors. The following discussion summarizes TDS' cash flow activities for the three months ended March 31, 2024 and 2023.

2024 Commentary

TDS’ Cash, cash equivalents and restricted cash increased $8 million. Net cash provided by operating activities was $224 million due to net income of $38 million adjusted for non-cash items of $258 million, distributions received from unconsolidated entities of $22 million, and changes in working capital items which decreased net cash by $94 million. The working capital changes were primarily driven by payment of associate bonuses and timing of vendor payments, partially offset by reduced receivable and inventory balances.

Cash flows used for investing activities were $246 million, due primarily to payments for property, plant and equipment of $235 million.

Cash flows provided by financing activities were $30 million, due primarily to $100 million borrowed under the TDS revolving credit agreement and a $40 million borrowing under the UScellular receivables securitization agreement. These were partially offset by $57 million in repayments on the UScellular receivables securitization agreement and the TDS and UScellular term loan agreements, the payment of $39 million in dividends and cash paid for software license agreements of $9 million.

2023 Commentary

TDS’ Cash, cash equivalents and restricted cash decreased $90 million. Net cash provided by operating activities was $46 million due to net income of $12 million adjusted for non-cash items of $240 million, distributions received from unconsolidated entities of $20 million, and changes in working capital items which decreased net cash by $226 million. The working capital changes were primarily driven by timing of vendor payments and payment of associate bonuses, partially offset by a decrease in customer and agent receivable balances.

Cash flows used for investing activities were $334 million, which included payments for property, plant and equipment of $331 million.

Cash flows provided by financing activities were $198 million, due primarily to $115 million borrowed under the UScellular receivables securitization agreement, $100 million borrowed under the TDS revolving credit agreement, and $100 million borrowed under the TDS export credit agreement. These were partially offset by a $60 million repayment on the UScellular EIP receivables repurchase agreement, the payment of $38 million in dividends and cash paid for software license agreements of $8 million.