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Telephone and Data Systems' (TDS) Q3 Earnings Miss Estimates
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Telephone and Data Systems, Inc. (TDS - Free Report) reported unimpressive third-quarter 2021 results, wherein both the bottom and the top lines missed the Zacks Consensus Estimate.
The TDS family of companies continues to execute on its strategic priorities. While U.S. Cellular is making improvements in its high-performing network, TDS Telecom is making progress in its new fiber expansion markets.
Net Income
Net income in the September quarter was $28 million or 24 cents per share compared with $78 million or 66 cents per share in the prior-year quarter. The decline was due to lower operating income, and higher interest and income tax expenses. The bottom line missed the Zacks Consensus Estimate by 3 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Quarterly total operating revenues inched up 0.3% year over year to $1,328 million, driven by growth in the TDS Telecom business. The top line, however, missed the consensus estimate of $1,341 million.
Segment Results
U.S. Cellular’s revenues declined 1.1% year over year to $1,016 million due to lower equipment sales. However, the positive impact of postpaid average revenue per user (ARPU) contributed to the growth in retail service revenues. Also, prepaid results indicate an improving trend. The company’s 5G and network modernization programs are on track while it continues to be optimistic about the performance capabilities of the millimeter wave spectrum.
Total operating expenses increased to $971 million from $962 million. Operating income declined to $45 million from $65 million in the year-ago quarter. Postpaid ARPU improved to $48.12 from $47.10, and average revenue per account grew to $125.99 from $123.27. Prepaid ARPU decreased to $35.05 from $35.45 a year ago.
TDS Telecom’s revenues were $252 million, up 2% year over year, driven by growth in broadband connections. The company continues to upsize its fiber program and has deployed fiber to 40% of its wireline service addresses. Currently available in select markets, it aims to provide 2 Gig Internet speeds in all of its fiber expansion markets.
Total operating expenses increased to $224 million from $219 million. Operating income slipped to $27 million from $28 million in the prior-year quarter. Total connections were 1,205,700 compared with 1,205,900 a year ago. Residential revenue per connection increased to $57.75 from $55.66.
Cash Flow & Liquidity
During the first nine months of 2021, Telephone and Data Systems generated $863 million of cash from operating activities compared with $1,166 million in the prior-year period.
As of Sep 30, 2021, the company had $725 million in cash and cash equivalents with $2,804 million of long-term debt.
Outlook
Telephone and Data Systems has guided for full-year 2021. It now expects total operating revenues at TDS Telecom in the range of $990-$1,020 million, changed from the prior guidance of $975-$1,025 million. Adjusted EBITDA is projected to be $295-$315 million, changed from the previous guidance of $290-$320 million. Adjusted OIBDA is anticipated to be $295-$315 million, changed from the earlier guidance of $290-$320 million. Capital expenditures are estimated in the band of $400-$450 million, changed from the prior guidance of $425-$475 million.
At U.S. Cellular, service revenues are expected in the band of $3,075-$3,125 million, changed from the prior guidance of $3,050-$3,150 million. The company, however, has maintained its outlook for adjusted EBITDA in the range of $1,025-$1,125 million and adjusted OIBDA in the band of $850-$950 million. Capital expenditures are estimated between $700 million and $800 million, changed from the earlier guidance of $775 million to $875 million.
Zacks Rank & Stocks to Consider
Telephone and Data Systems currently carries a Zacks Rank #5 (Strong Sell).
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Telephone and Data Systems' (TDS) Q3 Earnings Miss Estimates
Telephone and Data Systems, Inc. (TDS - Free Report) reported unimpressive third-quarter 2021 results, wherein both the bottom and the top lines missed the Zacks Consensus Estimate.
The TDS family of companies continues to execute on its strategic priorities. While U.S. Cellular is making improvements in its high-performing network, TDS Telecom is making progress in its new fiber expansion markets.
Net Income
Net income in the September quarter was $28 million or 24 cents per share compared with $78 million or 66 cents per share in the prior-year quarter. The decline was due to lower operating income, and higher interest and income tax expenses. The bottom line missed the Zacks Consensus Estimate by 3 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Telephone and Data Systems, Inc. price-consensus-eps-surprise-chart | Telephone and Data Systems, Inc. Quote
Revenues
Quarterly total operating revenues inched up 0.3% year over year to $1,328 million, driven by growth in the TDS Telecom business. The top line, however, missed the consensus estimate of $1,341 million.
Segment Results
U.S. Cellular’s revenues declined 1.1% year over year to $1,016 million due to lower equipment sales. However, the positive impact of postpaid average revenue per user (ARPU) contributed to the growth in retail service revenues. Also, prepaid results indicate an improving trend. The company’s 5G and network modernization programs are on track while it continues to be optimistic about the performance capabilities of the millimeter wave spectrum.
Total operating expenses increased to $971 million from $962 million. Operating income declined to $45 million from $65 million in the year-ago quarter. Postpaid ARPU improved to $48.12 from $47.10, and average revenue per account grew to $125.99 from $123.27. Prepaid ARPU decreased to $35.05 from $35.45 a year ago.
TDS Telecom’s revenues were $252 million, up 2% year over year, driven by growth in broadband connections. The company continues to upsize its fiber program and has deployed fiber to 40% of its wireline service addresses. Currently available in select markets, it aims to provide 2 Gig Internet speeds in all of its fiber expansion markets.
Total operating expenses increased to $224 million from $219 million. Operating income slipped to $27 million from $28 million in the prior-year quarter. Total connections were 1,205,700 compared with 1,205,900 a year ago. Residential revenue per connection increased to $57.75 from $55.66.
Cash Flow & Liquidity
During the first nine months of 2021, Telephone and Data Systems generated $863 million of cash from operating activities compared with $1,166 million in the prior-year period.
As of Sep 30, 2021, the company had $725 million in cash and cash equivalents with $2,804 million of long-term debt.
Outlook
Telephone and Data Systems has guided for full-year 2021. It now expects total operating revenues at TDS Telecom in the range of $990-$1,020 million, changed from the prior guidance of $975-$1,025 million. Adjusted EBITDA is projected to be $295-$315 million, changed from the previous guidance of $290-$320 million. Adjusted OIBDA is anticipated to be $295-$315 million, changed from the earlier guidance of $290-$320 million. Capital expenditures are estimated in the band of $400-$450 million, changed from the prior guidance of $425-$475 million.
At U.S. Cellular, service revenues are expected in the band of $3,075-$3,125 million, changed from the prior guidance of $3,050-$3,150 million. The company, however, has maintained its outlook for adjusted EBITDA in the range of $1,025-$1,125 million and adjusted OIBDA in the band of $850-$950 million. Capital expenditures are estimated between $700 million and $800 million, changed from the earlier guidance of $775 million to $875 million.
Zacks Rank & Stocks to Consider
Telephone and Data Systems currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader sector are Harmonic Inc. (HLIT - Free Report) , Clearfield, Inc. (CLFD - Free Report) , and SeaChange International, Inc. (SEAC - Free Report) . While Harmonic and Clearfield sport a Zacks Rank #1 (Strong Buy), SeaChange carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Harmonic delivered a trailing four-quarter earnings surprise of 61.1%, on average.
Clearfield pulled off a trailing four-quarter earnings surprise of 49%, on average.
SeaChange delivered a trailing four-quarter earnings surprise of 28.9%, on average.