TELEPHONE DATA SYSTEMS INC DE

TDS operates a capital-intensive business. TDS makes substantial investments to acquire wireless spectrum licenses 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 and Note 7 — Divestitures in the Notes to Consolidated Financial Statements 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 nine months ended September 30, 2024 and 2023.

2024 Commentary

TDS’ Cash, cash equivalents and restricted cash increased $202 million. Net cash provided by operating activities was $933 million due to net loss of $34 million adjusted for non-cash items of $841 million, distributions received from unconsolidated entities of $106 million, including $37 million in distributions from the LA Partnership, and changes in working capital items which increased net cash by $20 million. The working capital changes were primarily driven by reduced receivable and inventory balances, partially offset by payments of associate bonuses and agent rebates and commissions.

Cash flows used for investing activities were $580 million, due primarily to payments for property, plant and equipment of $655 million partially offset by proceeds received from the divestiture of the hosted and managed services (HMS) operations. See Note 7 — Divestitures in the Notes to Consolidated Financial Statements for additional information.

Cash flows used for financing activities were $151 million, due primarily to $300 million borrowed under TDS term loan agreements, $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 $200 million in repayments on the TDS revolving credit agreement, $188 million in repayments on the UScellular receivables securitization agreement, the payment of $83 million in dividends, cash paid for software license agreements of $32 million and the repurchase of $26 million of UScellular Common Shares.

2023 Commentary

TDS’ Cash, cash equivalents and restricted cash decreased $106 million. Net cash provided by operating activities was $923 million due to net income of $16 million adjusted for non-cash items of $727 million, distributions received from unconsolidated entities of $97 million, including $37 million in distributions from the LA Partnership, and changes in working capital items which increased net cash by $83 million. The working capital changes were primarily driven by reduced inventory and receivable balances and a federal income tax refund of $57 million received during the second quarter of 2023, partially offset by timing of vendor payments and payment of associate bonuses.

Cash flows used for investing activities were $922 million, due primarily to payments for property, plant and equipment of $906 million.

Cash flows used by financing activities were $107 million, due primarily to $385 million in repayments on the UScellular receivables securitization agreement, $265 million in repayments on the TDS revolving credit agreement, a $60 million repayment on the UScellular EIP receivables repurchase agreement, the payment of $114 million in dividends and cash paid for software license agreements of $29 million. These were partially offset by $300 million borrowed under the TDS secured term loan agreement, $265 million borrowed under the TDS revolving credit agreement, $115 million borrowed under the UScellular receivables securitization agreement and $100 million borrowed under the TDS export credit agreement.