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Telephone & Data Systems (TDS)
NYSE:TDS
US Market

Telephone & Data Systems (TDS) AI Stock Analysis

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Telephone & Data Systems

(NYSE:TDS)

Rating:53Neutral
Price Target:
$35.00
▼(-1.63%Downside)
TDS exhibits strong cash flow generation and strategic financial planning, as highlighted in the earnings call. However, the declining revenue and profitability challenges, high leverage, and valuation concerns weigh heavily on the overall score. The score reflects a need for strategic improvements to address these financial and operational challenges.

Telephone & Data Systems (TDS) vs. SPDR S&P 500 ETF (SPY)

Telephone & Data Systems Business Overview & Revenue Model

Company DescriptionTelephone and Data Systems, Inc. (TDS) is a diversified telecommunications company based in the United States, operating primarily through its subsidiaries, U.S. Cellular and TDS Telecom. The company provides a range of communication services, including wireless, broadband, and voice services, catering to both consumer and business markets. TDS is committed to delivering reliable and high-quality connectivity solutions, with operations spanning rural, suburban, and urban areas.
How the Company Makes MoneyTDS generates revenue primarily through its two main subsidiaries: U.S. Cellular and TDS Telecom. U.S. Cellular, as a wireless telecommunications provider, earns its income from providing mobile voice and data services, including postpaid and prepaid plans, as well as device sales. Additional revenue streams include roaming agreements with other carriers and fees for additional services such as insurance and device protection plans. TDS Telecom, on the other hand, contributes to the company's earnings by offering broadband, video, and voice services to residential and commercial customers. This includes revenue from internet subscriptions, traditional and IP-based voice services, and digital television offerings. The company also benefits from strategic partnerships and government funding programs aimed at expanding broadband access, particularly in underserved areas, which play a significant role in supporting its financial performance.

Telephone & Data Systems Earnings Call Summary

Earnings Call Date:May 02, 2025
(Q1-2025)
|
% Change Since: -5.47%|
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 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
45
Neutral
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.
Balance Sheet
55
Neutral
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.
Cash Flow
60
Neutral
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
4.86B4.96B5.16B5.41B5.33B5.22B
Gross Profit
2.79B2.83B2.83B2.85B2.86B2.87B
EBIT
30.00M63.00M-414.00M328.00M477.00M476.00M
EBITDA
1.17B1.20B682.00M1.08B1.18B1.19B
Net Income Common Stockholders
-50.00M-28.00M-500.00M62.00M156.00M226.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
348.00M364.00M236.00M360.00M367.00M1.43B
Total Assets
13.54B13.68B13.92B14.55B13.49B12.53B
Total Debt
5.09B5.10B5.14B4.80B4.04B4.50B
Net Debt
4.75B4.74B4.91B4.44B3.67B3.07B
Total Liabilities
7.67B7.80B7.91B7.93B6.75B6.92B
Stockholders Equity
5.08B5.09B5.20B5.85B5.93B4.80B
Cash FlowFree Cash Flow
318.00M241.00M-199.00M-620.00M-48.00M164.00M
Operating Cash Flow
1.11B1.15B1.14B1.16B1.10B1.53B
Investing Cash Flow
-631.00M-754.00M-1.33B-1.78B-2.46B-1.51B
Financing Cash Flow
-383.00M-277.00M56.00M613.00M321.00M957.00M

Telephone & Data Systems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price35.58
Price Trends
50DMA
35.45
Positive
100DMA
35.86
Negative
200DMA
32.21
Positive
Market Momentum
MACD
-0.08
Negative
RSI
55.33
Neutral
STOCH
72.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TDS, the sentiment is Positive. The current price of 35.58 is above the 20-day moving average (MA) of 34.38, above the 50-day MA of 35.45, and above the 200-day MA of 32.21, indicating a bullish trend. The MACD of -0.08 indicates Negative momentum. The RSI at 55.33 is Neutral, neither overbought nor oversold. The STOCH value of 72.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks

Telephone & Data Systems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TKTKC
76
Outperform
$5.39B13.176.74%2.39%14.09%-11.43%
71
Outperform
$6.28B17.6110.19%4.84%-1.52%4874.58%
USUSM
64
Neutral
$5.34B-0.84%-3.48%-169.60%
61
Neutral
$14.60B5.88-4.32%3.68%2.75%-30.55%
56
Neutral
$4.04B-78.94%-7.86%97.11%
TETEO
55
Neutral
$4.29B20.133.99%-12.77%40.80%
TDTDS
53
Neutral
$3.75B-0.97%0.46%-5.14%78.63%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TDS
Telephone & Data Systems
35.38
14.95
73.18%
LUMN
Lumen Technologies
4.33
3.10
252.03%
TEO
Telecom Argentina
10.10
3.13
44.91%
TKC
Turkcell Iletisim
6.32
-0.79
-11.11%
USM
United States Cellular
62.62
9.27
17.38%
TIGO
Millicom International Cellular SA
36.40
12.87
54.70%

Telephone & Data Systems Corporate Events

Executive/Board ChangesShareholder Meetings
Telephone & Data Systems Elects Directors at Shareholder Meeting
Neutral
May 23, 2025

At the Annual Meeting of Shareholders on May 22, 2025, Telephone & Data Systems announced the election of directors and the approval of key proposals. Eight directors were elected by holders of Series A Common Shares and four by holders of Common Shares. Additionally, the selection of PricewaterhouseCoopers LLP as independent accountants for 2025 was ratified, and the compensation of named executive officers was approved.

The most recent analyst rating on (TDS) stock is a Buy with a $34.00 price target. To see the full list of analyst forecasts on Telephone & Data Systems stock, see the TDS Stock Forecast page.

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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.