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, voice and wireless communications services to residential, commercial and wholesale customers, with the constant focus on delivering outstanding customer service.

The following MD&A omits discussion of 2023 compared to 2022. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in TDS' Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 16, 2024, for that discussion.

OPERATIONS

▪Serves 1.1 million connections in 31 states.

▪Employs approximately 3,300 associates.

TDS Telecom Mission and Strategy

TDS Telecom's mission is to create a better world by providing high-quality communications services to connect people and businesses, support education, and strengthen communities.

TDS Telecom seeks to be the preferred broadband provider by offering fiber-rich networks, high-quality products and services, and a seamless customer experience. TDS Telecom's strategic efforts include:

▪TDS Telecom strives to provide high-quality broadband services in its markets with the ability to provide value-added bundling with video, voice and wireless service options. TDS Telecom focuses on driving growth by investing in fiber deployment.

▪TDS Telecom seeks to grow its operations by creating clusters of markets in attractive, growing locations and may seek to acquire and/or divest of assets to support its strategy.

Operational Overview — TDS Telecom

Total Service Address Mix

As of December 31,

TDS Telecom increased its service addresses 6% from a year ago to 1.8 million as of December 31, 2024, through network expansion. 44% of incumbent service addresses are served by fiber.

TDS Telecom offers 1Gig+ service to 74% of its total footprint as of December 31, 2024, compared to 72% a year ago.

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

Divestitures in the fourth quarter of 2024 resulted in a decrease of 15,700 connections.

Residential Broadband Connections by Speed

As of December 31,

Residential broadband customers continue to take higher speeds with 81% taking speeds of 100 Mbps or greater and 22% choosing 1Gig+.

Residential Revenue per Connection

For the year ended December 31,

Total residential revenue per connection increased 5% for 2024, due primarily to price increases. Price increases are expected to moderate in 2025 relative to 2024.

Financial Overview — TDS Telecom

The following discussion and analysis compares financial results for the year ended December 31, 2024, to the year ended December 31, 2023.

N/M - Percentage change not meaningful.

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

Operating Revenues

Residential revenues consist of:

•Broadband services

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

•Voice services

•Wireless 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:

Residential revenues increased for 2024 due primarily to price increases and growth in broadband connections, partially offset by a decline in voice and video connections.

Commercial revenues decreased for 2024 due primarily to declining connections in CLEC markets, partially offset by increases in ad revenue.

Cost of services

Cost of services decreased for 2024 due primarily to lower employee-related expenses, plant and maintenance costs, costs to provide legacy services, and information processing costs, partially offset by higher video programming costs.

Selling, general and administrative

Selling, general and administrative expenses decreased for 2024 due primarily to decreases in employee-related expenses and professional fees, partially offset by higher property taxes and IT infrastructure costs.

Depreciation, amortization and accretion

Depreciation, amortization and accretion increased for 2024 due primarily to increased capital expenditures on new fiber assets and customer premise equipment.

Loss on impairment of intangible assets

During the fourth quarter of 2023, TDS Telecom recorded a $547 million loss on impairment of Goodwill. See Note 8 — Intangible Assets in the Notes to Consolidated Financial Statements for additional information.