TELEPHONE DATA SYSTEMS INC DE

Business Overview

TDS Telecom owns, operates and invests in high-quality networks, services and products in a mix of small to mid-sized urban, suburban and rural communities throughout the United States. TDS Telecom is a wholly-owned subsidiary of TDS and provides a wide range of broadband, video and voice communications services to residential, commercial and wholesale customers, with the constant focus on delivering outstanding customer service.

OPERATIONS

▪Serves 1.2 million connections in 32 states

▪Employs approximately 3,400 associates

Operational Overview — TDS Telecom

Total Service Address Mix

As of March 31,

TDS Telecom increased its service addresses 12% from a year ago to 1.7 million as of March 31, 2024 through network expansion.

TDS Telecom offers 1Gig+ service to 73% of its total footprint as of March 31, 2024, compared to 67% a year ago.

Total residential broadband connections increased by 8,100 during the three months ended March 31, 2024, due primarily to net additions of 6,400 as well as certain other adjustments.

Total connections decreased due to legacy voice, video, and competitive local exchange carrier (CLEC) connections declines, partially offset by broadband connection growth.

A majority of TDS Telecom's residential customers take advantage of bundling options as 54% of customers subscribe to more than one service.

Residential Broadband Connections by Speed

As of March 31,

Residential broadband customers continue to choose higher speeds with 78% taking speeds of 100 Mbps or greater and 17% choosing 1Gig+.

Residential Revenue per Connection

Total residential revenue per connection increased 7% for the three months ended March 31, 2024, due to price increases and product mix changes, partially offset by promotional activity.

Financial Overview — TDS Telecom

1 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

2 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

Operating Revenues

Three Months Ended March 31, 2024 and 2023

Residential revenues consist of:

•Broadband services

•Video services, including IPTV, traditional cable programming and satellite offerings

•Voice services

Commercial revenues consist of:

•High-speed and dedicated business internet services

•Video services

•Voice services

Wholesale revenues consist of:

•Network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom's networks

•Federal and state regulatory support, including E-ACAM

Key components of changes in the statement of operations items were as follows:

Total operating revenues

Residential revenues increased for the three months ended March 31, 2024, due primarily to price increases and growth in broadband connections, partially offset by promotional activity and a decline in video and voice connections.

Commercial revenues decreased for the three months ended March 31, 2024, due primarily to declining connections in CLEC markets.

Cost of services

Cost of services decreased for the three months ended March 31, 2024, due primarily to a decrease in employee-related expenses and lower plant and maintenance costs, partially offset by higher video programming costs.

Selling, general and administrative

Selling, general and administrative expenses decreased for the three months ended March 31, 2024, due primarily to a decrease in employee-related expenses and lower advertising and marketing costs.

Depreciation, amortization and accretion

Depreciation, amortization and accretion increased for the three months ended March 31, 2024, due primarily to capital expenditures on new fiber assets and customer premise equipment.