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 6 — 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 three months ended March 31, 2025 and 2024.

2025 Commentary

TDS’ Cash, cash equivalents and restricted cash decreased $13 million. Net cash provided by operating activities was $186 million due to net income of $12 million adjusted for non-cash items of $257 million, distributions received from unconsolidated entities of $11 million and changes in working capital items which decreased net cash by $94 million. The working capital changes were primarily driven by payments of associate bonuses, wages and other benefits, prepaid maintenance and timing of vendor payments, partially offset by reduced receivable balances.

Cash flows used for investing activities were $123 million, due primarily to payments for property, plant and equipment of $129 million, partially offset by cash received from divestitures of $8 million.

Cash flows used for financing activities were $76 million, due primarily to the payment of $22 million in dividends, the repurchase of $21 million UScellular Common Shares, tax payments, net of cash receipts, for TDS and UScellular stock-based compensation awards of $13 million, cash paid for software license agreements of $10 million and repayments on the TDS and UScellular term loan agreements of $7 million.

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, wages and other benefits, prepaid maintenance 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.