Telephone and Data Systems Inc. (TDS) reported fourth-quarter 2014 adjusted loss of 14 cents per share, narrower than the Zacks Consensus Estimate of a loss of 25 cents.
GAAP net loss per share stood at 15 cents compared with a loss of 6 cents in the year-ago quarter.
Revenues inched up 10% year over year to $1,297 million in the reported quarter but missed the consensus mark of $1,323 million. The company reported quarterly operating loss of $36.1 million compared with $20.9 million in the year-ago quarter.
Wireless Division
The company’s wireless division United States Cellular Corp. (USM) reported fourth-quarter 2014 loss per share of 25 cents, narrower than the Zacks Consensus Estimate of a loss of 64 cents.
Fourth-quarter revenues of $1,008.7 million missed the Zacks Consensus Estimate of $1,020 million but increased 12% from $902.7 million reported in the year-ago quarter. Quarterly Service revenues increased 3% to $849.8 million. Revenues from Equipment sales were up by a substantial 104.9% to $158.9 million. Smartphone sales remained strong and represented 59.8% penetration among postpaid customers, up from 50.8% in the year-ago quarter. Total cell sites in service were 6,220 as compared to 6,161 in the fourth quarter of 2013.
United States Cellular exited the reported quarter with a subscriber base of 4,760,000 compared with 4,774,000 at the end of the year-ago quarter. Postpaid subscriber base was 4,298,000 against 4,267,000 at the end of the prior-year quarter and prepaid subscriber base was 348,000 against 343,000 at year-ago quarter end. In the reported quarter, United States Cellular added a net 98,000 postpaid subscribers compared with a net loss of 71,000 in the year-ago quarter. However, the company lost 2,000 prepaid customers in the same quarter compared with the loss of 26,000 customers in the prior-year quarter.
Wireline Division
Revenues from the wireline segment came in at $180.1 million, flat year over year. In the reported quarter, Cable revenues improved a whopping 101.4% to $43.3 million and HMS revenues rose 14% to $60.1 million.
At the end of the reported quarter, Telephone and Data Systems had 588,500 (down 0.7% year over year) wireline residential customers, 358,100 (down 4.0% year over year) wireline commercial customers and 267,300 (up 81.5% year over year) cable connections. Total wireline residential revenue per connection stood at $41.56, up 1.5% year over year.
Liquidity
Telephone and Data Systems exited the fourth quarter with cash and marketable securities of $471.9 million compared with $880.1 million at the end of 2013. At quarter-end, total debt was $1,993.6 million as against $1,720.1 million at the end of 2013. The debt-to-capitalization ratio was 0.33 in comparison with 0.27 at the end of the fourth quarter of 2013. In fourth-quarter 2014, Telephone and Data Systems generated a negative $101.4 million of cash from operations compared with a positive $56.7 million in the prior-year quarter. Quarterly free cash flow was a negative $328.1 million against a negative $186.3 million in the year-ago quarter.
Share Repurchase
The company repurchased 312,009 shares in the fourth quarter for an aggregate amount of $7.3 million.
Guidance
For fiscal 2015, TDS Telecom maintains its total operating revenue guidance in the range of $1130–$1,180 million. Adjusted income before income tax is estimated in the band of $280–$310 million while capital expenditure is forecasted at around $220 million.
Zacks Rank & Other Stocks to Consider
Telephone and Data Systems currently carries a Zacks Rank #2 (Buy). Other favorably-ranked stocks in the same space include Telenav Inc. (TNAV) and Level 3 Communications Inc. (LVLT). Both the stocks carry a Zacks Rank #2.
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