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Telephone & Data Systems (TDS)
NYSE:TDS
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Telephone & Data Systems
(NYSE:TDS)
Rating:49Neutral
Price Target:
$34.00
▲( 1.28% Upside)
Telephone & Data Systems (TDS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.60B
Dividend Yield0.47%
Average Volume (3M)963.79K
Price to Earnings (P/E)―
Beta (1Y)0.50
Revenue Growth-5.14%
EPS Growth78.63%
CountryUS
Employees7,900
SectorCommunication Services
Sector Strength86
IndustryTelecommunications Services
Share Statistics
EPS (TTM)-0.09
Shares Outstanding107,208,070
10 Day Avg. Volume746,579
30 Day Avg. Volume963,792
Financial Highlights & Ratios
PEG Ratio13.54
Price to Book (P/B)0.78
Price to Sales (P/S)0.00
P/FCF Ratio11.78
Enterprise Value/Market Cap2.46
Enterprise Value/Revenue0.44
Enterprise Value/Gross Profit3.16
Enterprise Value/Ebitda2.37
Forecast
1Y Price Target
$47.00Price Target Upside40.01% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Telephone & Data Systems Business Overview & Revenue Model
Company DescriptionTelephone and Data Systems, Inc., a telecommunications company, provides communications services in the United States. It operates through two segments: UScellular and TDS Telecom. The company offers wireless solutions to consumers and business and government customers, including a suite of connected Internet of things (IoT) solutions, and software applications for monitor and control, business automation/operations, communication, fleet and asset management, smart water solutions, private cellular networks and custom, and end-to-end IoT solutions; wireless priority services and quality priority and preemption options; smartphones and other handsets, tablets, wearables, mobile hotspots, routers, and IoT devices; and accessories, such as cases, screen protectors, chargers, and memory cards, as well as consumer electronics, including audio, home automation and networking products. It also provides replace and repair services; Trade-In program through which it buys customers' used equipment; internet connections and all-home WI-FI services; TDS TV+, an integrated cloud television platform that offers video content; local and long-distance telephone service, VoIP, and enhanced services; and broadband, IP-based services, and hosted voice and video collaboration services. The company sells its products through retail sales, direct and indirect sales, third-party retailers, and independent agents, as well as through ecommerce and telesales. As of December 31, 2021, it offers its services to customers 5 million wireless connections, and 1.2 million wireline and cable connections. The company was incorporated in 1968 and is headquartered in Chicago, Illinois.
How the Company Makes MoneyTelephone and Data Systems generates revenue primarily through its two main business segments, U.S. Cellular and TDS Telecom. U.S. Cellular, a subsidiary of TDS, earns money by providing wireless services, selling devices, and offering equipment installment plans to consumers and businesses. This includes revenue from voice, messaging, data, and other wireless services as well as handset and accessory sales. Meanwhile, TDS Telecom generates income through its wireline and cable services by offering broadband internet, video, and voice services to residential and commercial customers. The company leverages strategic partnerships with content providers and equipment manufacturers to enhance its service offerings. TDS also benefits from recurring revenue streams due to its subscription-based model, which ensures a stable cash flow from its extensive customer base.
Telephone & Data Systems Financial Statement Overview
Summary
TDS faces declining revenues and profitability challenges, with a negative net profit margin and high leverage. Despite strong cash flows, the high debt-to-equity ratio poses a risk, and strategic improvements are needed to enhance profitability and manage leverage effectively.Income Statement
The company's TTM revenue has declined by 2.18% compared to the previous annual period, indicating a challenge in maintaining growth. Gross profit margin for TTM stands at 57.56%, which is healthy, but the net profit margin is negative at -1.03% due to losses. EBIT and EBITDA margins also indicate pressures on operational profitability, with EBIT margin at 0.62% and EBITDA margin at 24.03%. Overall, the income statement reflects declining revenues and profitability issues.45
Neutral
Balance Sheet
The debt-to-equity ratio is relatively high at 1.00, indicating significant leverage, which could be a risk if revenues continue to decline. Return on equity (ROE) is negative at -0.98% due to the net loss, reflecting a challenge in generating returns for shareholders. The equity ratio stands at 37.50%, showing a moderate level of equity financing. The balance sheet suggests potential leverage risks amid declining profitability.55
Neutral
Cash Flow
Operating cash flow is strong, with a high ratio to net income, indicating good cash generation capabilities despite net losses. Free cash flow has improved significantly, increasing by 31.95% compared to the previous annual period. The free cash flow to net income ratio is positive, suggesting better cash management and cost control. Despite strong cash flows, the underlying profitability challenges remain a concern.60
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.86B | 4.96B | 5.16B | 5.41B | 5.33B | 5.22B | Gross Profit |
| 2.79B | 2.83B | 2.83B | 2.85B | 2.86B | 2.87B | EBIT |
| 30.00M | 63.00M | -414.00M | 328.00M | 477.00M | 476.00M | EBITDA |
| 1.17B | 1.20B | 682.00M | 1.08B | 1.18B | 1.19B | Net Income Common Stockholders |
| -50.00M | -28.00M | -500.00M | 62.00M | 156.00M | 226.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 348.00M | 364.00M | 236.00M | 360.00M | 367.00M | 1.43B | Total Assets |
| 13.54B | 13.68B | 13.92B | 14.55B | 13.49B | 12.53B | Total Debt |
| 5.09B | 5.10B | 5.14B | 4.80B | 4.04B | 4.50B | Net Debt |
| 4.75B | 4.74B | 4.91B | 4.44B | 3.67B | 3.07B | Total Liabilities |
| 7.67B | 7.80B | 7.91B | 7.93B | 6.75B | 6.92B | Stockholders Equity |
| 5.08B | 5.09B | 5.20B | 5.85B | 5.93B | 4.80B |
| Cash Flow | Free Cash Flow | ||||
| 318.00M | 241.00M | -199.00M | -620.00M | -48.00M | 164.00M | Operating Cash Flow |
| 1.11B | 1.15B | 1.14B | 1.16B | 1.10B | 1.53B | Investing Cash Flow |
| -631.00M | -754.00M | -1.33B | -1.78B | -2.46B | -1.51B | Financing Cash Flow |
| -383.00M | -277.00M | 56.00M | 613.00M | 321.00M | 957.00M |
Telephone & Data Systems Technical Analysis
Negative
33.57
Price Trends
35.85
Negative
35.75
Negative
31.50
Positive
Market Momentum
-0.55
Positive
42.61
Neutral
37.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TDS, the sentiment is Negative. The current price of 33.57 is below the 20-day moving average (MA) of 34.71, below the 50-day MA of 35.85, and above the 200-day MA of 31.50, indicating a neutral trend. The MACD of -0.55 indicates Positive momentum. The RSI at 42.61 is Neutral, neither overbought nor oversold. The STOCH value of 37.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TDS.
Telephone & Data Systems Risk Analysis
Telephone & Data Systems disclosed 30 risk factors in its most recent earnings report. Telephone & Data Systems reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
1)TDS and UScellular entered into a Securities Purchase Agreement dated as of May 24, 2024 with T-Mobile and USCC Wireless Holdings, LLC, pursuant to which, among other things, UScellular has agreed to sell its wireless operations and select spectrum assets to T-Mobile. In addition, UScellular, and certain subsidiaries of UScellular, entered into the Verizon Purchase Agreement on October 17, 2024, and the AT&T Purchase Agreement on November 6, 2024 to sell certain wireless spectrum licenses. There is no guarantee that the transactions contemplated by the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement will be able to be consummated or that UScellular will be able to find buyers at mutually agreeable prices for its spectrum assets not subject to the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement. Costs and uncertainties related to the transactions could have adverse effects on TDS' financial condition or results of operations. Q4, 2024
2.
2)If the T-Mobile, Verizon and AT&T transactions are not consummated, substantial changes will be required to the manner in which UScellular's wireless business is conducted, and we expect there will be a material adverse effect on TDS' financial condition and results of operations. Q4, 2024
3.
3)If the T-Mobile, Verizon and AT&T transactions are consummated, substantial costs will be triggered and substantial changes will be required to the manner in which UScellular's remaining business is conducted, which could have a material adverse effect on TDS' financial condition and results of operations. Q4, 2024
Telephone & Data Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $5.51B | 13.15 | 6.74% | 2.37% | 14.09% | -11.43% | |
71 Outperform | $6.34B | 17.75 | 10.19% | 4.75% | -1.52% | 4874.58% | |
64 Neutral | $5.18B | ― | -0.84% | ― | -3.48% | -169.60% | |
61 Neutral | $4.66B | 22.53 | 3.99% | ― | -12.77% | 40.80% | |
60 Neutral | $14.12B | 6.43 | -3.57% | 3.69% | 2.49% | -35.43% | |
51 Neutral | $3.94B | ― | -78.94% | ― | -7.86% | 97.11% | |
49 Neutral | $3.60B | ― | -0.97% | 0.47% | -5.14% | 78.63% |
* Communication Services Sector Average
Performance Comparison
TDS
Telephone & Data Systems
33.57
14.91
79.90%
LUMN
Lumen Technologies
3.72
2.45
192.91%
TEO
Telecom Argentina
10.59
2.54
31.55%
TKC
Turkcell Iletisim
6.38
-0.48
-7.00%
USM
United States Cellular
61.08
18.10
42.11%
TIGO
Millicom International Cellular SA
36.89
13.76
59.49%
Telephone & Data Systems Earnings Call Summary
Earnings Call Date:May 02, 2025
(Q1-2025)
| % Change Since: -10.81%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. While there were significant achievements in financial structuring and fiber expansion, challenges in subscriber retention and competitive market pressures were evident. The anticipation of the T-Mobile transaction and future dividend declarations add positive momentum, but current operational challenges and revenue declines offset some of these potential benefits.Q1-2025 Updates
Positive Updates
Successful Financing and Transaction Preparation
TDS and UScellular extended near-term bank maturities and amended revolvers to ensure financial flexibility ahead of the expected mid-2025 closing of the transaction with T-Mobile.
Increased Third-Party Tower Revenue
Third-party tower revenue increased by 6% due to new colocations and escalators on renewed leases, indicating strong performance in the Tower business segment.
Strong Free Cash Flow Generation
The company generated $79 million of free cash flow in Q1 2025, an $18 million increase over the same quarter last year, driven by reduced capital expenditures and stable operating expenses.
Aggressive Fiber Expansion
TDS expanded its fiber footprint by over 30% in the last three years and is on track to achieve its goal of 150,000 fiber addresses in 2025, with significant construction activities planned.
Introduction of Transformation Cost Savings Program
TDS Telecom identified $100 million in annual cost savings expected by year-end 2028, with some savings anticipated by the end of 2025.
Negative Updates
Negative Net Adds in Handset Customers
Despite improvements in promotional offers, UScellular still experienced negative net adds in handset customers, putting pressure on service revenues.
Decline in Operating Revenues
Total operating revenues for TDS Telecom were down 3% year-over-year due to divestitures and declines in commercial and wholesale revenue, along with decreases in residential video and voice connections.
Challenges from Competitive Market
The market remains highly competitive with aggressive promotions from competitors, including multiyear price locks and contract buyouts, impacting UScellular's ability to sustain high promotional expenses.
Non-Receipt of Expected Transaction Proceeds
UScellular does not expect to receive most of the $100 million contingent on achieving certain performance metrics prior to the T-Mobile transaction close, potentially reducing the purchase price closer to $4.3 billion.
Company Guidance
During the TDS and UScellular First Quarter 2025 Operating Results Conference Call, the company provided guidance on several metrics. The call highlighted expectations for a mid-2025 closing of the transaction with T-Mobile, which is anticipated to generate substantial proceeds. This includes a special dividend to shareholders, contingent on UScellular Board approval, and the use of proceeds to repay TDS' bank debt of approximately $1.2 billion. The guidance also covered financial flexibility initiatives, such as extending near-term bank maturities and amending revolvers. Despite the challenges of a promotional market, UScellular delivered $79 million in free cash flow in Q1 2025, an $18 million increase year-over-year. The company expects capital expenditures to decline in 2025 as 5G coverage builds are largely completed. TDS Telecom shared its goal to deliver 150,000 new fiber addresses in 2025, with total service addresses up 6% year-over-year. Additionally, TDS Telecom has identified $100 million in annual cost savings by 2028, expected to mitigate increased costs from expanding its fiber footprint. The company remains committed to transforming its operations and achieving long-term financial success.Telephone & Data Systems Corporate Events
Executive/Board Changes
TDS Updates Bylaws Following Leadership Changes
Neutral
Mar 14, 2025
On March 13, 2025, Telephone & Data Systems (TDS) implemented amendments to its Bylaws, following the recent appointments of Walter C. D. Carlson as President and CEO, LeRoy T. Carlson, Jr. as Vice Chair, and Christopher D. O’Leary as Lead Independent Director. These amendments outline the roles and responsibilities of the Vice Chair, including the ability to act in the absence or inability of the Chair or President, and specify that the Vice Chair is an officer position under the Chair’s supervision. The amendments also allow the Lead Independent Director to chair Board meetings if the Chair, President, or Vice Chair are unavailable.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.