2022 Estimated Results

UScellular

Previous

Current

(Dollars in millions)

Service revenues

$3,100-$3,200

$3,100-$3,150

Adjusted OIBDA1

$750-$900

$750-$825

Adjusted EBITDA1

$925-$1,075

$925-$1,000

Capital expenditures

$700-$800

Unchanged

TDS Telecom

Previous

Current

(Dollars in millions)

Total operating revenues

$1,010-$1,040

Unchanged

Adjusted OIBDA1

$260-$290

$270-$290

Adjusted EBITDA1

$260-$290

$270-$290

Capital expenditures

$500-$550

Unchanged

2022 Estimated Results

UScellular

TDS Telecom

(Dollars in millions)

Net income (GAAP)

N/A

N/A

Add back:

Income tax expense

N/A

N/A

Income before income taxes (GAAP)

$45-$120

$50-$70

Add back:

Interest expense

160

—

Depreciation, amortization and accretion expense

705

220

EBITDA (Non-GAAP)1

$910-$985

$270-$290

Add back or deduct:

(Gain) loss on asset disposals, net

15

—

Adjusted EBITDA (Non-GAAP)1

$925-$1,000

$270-$290

Deduct:

Equity in earnings of unconsolidated entities

170

—

Interest and dividend income

5

—

Adjusted OIBDA (Non-GAAP)1

$750-$825

$270-$290

Actual Results

Nine Months Ended

September 30, 2022

Year Ended

December 31, 2021

UScellular

TDS

Telecom

UScellular

TDS

Telecom

(Dollars in millions)

Net income (GAAP)

$ 62

$ 51

$ 160

$ 90

Add back:

Income tax expense

46

18

20

24

Income before income taxes (GAAP)

$ 108

$ 68

$ 180

$ 114

Add back:

Interest expense

115

(5)

175

(5)

Depreciation, amortization and accretion expense

520

158

678

198

EBITDA (Non-GAAP)1

$ 743

$ 222

$ 1,033

$ 308

Add back or deduct:

Loss on impairment of licenses

3

—

—

—

(Gain) loss on asset disposals, net

9

4

23

2

(Gain) loss on sale of business and other exit costs, net

(1)

—

(2)

—

Adjusted EBITDA (Non-GAAP)1

$ 754

$ 226

$ 1,054

$ 310

Deduct:

Equity in earnings of unconsolidated entities

122

—

179

—

Interest and dividend income

5

1

6

1

Other, net

—

1

—

(1)

Adjusted OIBDA (Non-GAAP)1

$ 627

$ 224

$ 869

$ 310

Numbers may not foot due to rounding.

1

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS' operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for September 30, 2022, can be found on TDS' website at investors.tdsinc.com.

United States Cellular Corporation

Summary Operating Data (Unaudited)

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

Retail Connections

Postpaid

Total at end of period

4,264,000

4,296,000

4,335,000

4,380,000

4,391,000

Gross additions

151,000

128,000

126,000

165,000

145,000

Feature phones

5,000

4,000

2,000

3,000

2,000

Smartphones

102,000

90,000

89,000

122,000

103,000

Connected devices

44,000

34,000

35,000

40,000

40,000

Net additions (losses)

(31,000)

(40,000)

(44,000)

(12,000)

(8,000)

Feature phones

(6,000)

(8,000)

(10,000)

(7,000)

(7,000)

Smartphones

(16,000)

(23,000)

(26,000)

5,000

2,000

Connected devices

(9,000)

(9,000)

(8,000)

(10,000)

(3,000)

ARPU1,2

$ 50.21

$ 50.07

$ 49.71

$ 48.62

$ 48.12

ARPA1,3

$ 130.27

$ 130.43

$ 129.93

$ 127.14

$ 125.99

Churn rate4

1.42 %

1.30 %

1.30 %

1.35 %

1.15 %

Handsets

1.15 %

1.10 %

1.10 %

1.10 %

0.95 %

Connected devices

3.40 %

2.73 %

2.70 %

3.08 %

2.59 %

Prepaid

Total at end of period

493,000

490,000

495,000

513,000

518,000

Gross additions

62,000

56,000

55,000

63,000

74,000

Net additions (losses)

2,000

(4,000)

(18,000)

(5,000)

11,000

ARPU2

$ 35.04

$ 35.25

$ 34.59

$ 34.53

$ 35.05

Churn rate4

4.07 %

4.07 %

4.84 %

4.39 %

4.09 %

Market penetration at end of period

Consolidated operating population

32,370,000

32,370,000

32,370,000

32,127,000

31,865,000

Consolidated operating penetration5

15 %

15 %

15 %

15 %

16 %

Capital expenditures (millions)

$ 136

$ 268

$ 137

$ 321

$ 185

Total cell sites in service

6,933

6,916

6,899

6,898

6,857

Owned towers

4,329

4,323

4,310

4,301

4,274

1

Q3 2021 Postpaid ARPU and ARPA amounts exclude $9 million of postpaid revenue related to an out-of-period error recorded in that quarter.

2

Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below:

• Postpaid ARPU consists of total postpaid service revenues and postpaid connections.

• Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

3

Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

4

Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.

5

Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets.

TDS Telecom

Summary Operating Data (Unaudited)

As of or for the Quarter Ended

9/30/2022

6/30/2022

3/31/2022

12/31/2021

9/30/2021

Residential connections

Broadband

Wireline, Incumbent

252,600

252,700

250,100

250,200

252,100

Wireline, Expansion

49,400

44,100

40,600

36,900

32,600

Cable

204,500

204,000

204,600

203,200

202,700

Total Broadband

506,500

500,800

495,200

490,300

487,400

Video

136,600

137,400

140,000

141,500

143,100

Voice

295,500

298,300

301,700

303,700

306,300

Total Residential connections

938,600

936,500

936,900

935,600

936,800

Commercial connections

242,800

250,700

260,000

264,300

269,000

Total connections

1,181,400

1,187,200

1,196,900

1,199,900

1,205,700

Residential revenue per connection1

$ 60.32

$ 59.67

$ 57.95

$ 57.86

$ 57.75

Capital expenditures (millions)

$ 166

$ 120

$ 105

$ 151

$ 91

Numbers may not foot due to rounding.

1

Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022

2021

2022

vs. 2021

2022

2021

2022

vs. 2021

(Dollars and shares in millions, except per share amounts)

Operating revenues

UScellular1

$ 1,083

$ 1,016

7 %

$ 3,120

$ 3,053

2 %

TDS Telecom

256

252

2 %

763

752

1 %

All Other2

53

60

(13) %

173

152

14 %

1,392

1,328

5 %

4,056

3,957

3 %

Operating expenses

UScellular

Expenses excluding depreciation, amortization and accretion

920

803

15 %

2,493

2,364

5 %

Depreciation, amortization and accretion

177

160

10 %

520

510

2 %

Loss on impairment of licenses

—

—

—

3

—

N/M

(Gain) loss on asset disposals, net

1

8

(89) %

9

15

(43) %

(Gain) loss on sale of business and other exit costs, net

—

—

8 %

(1)

(1)

40 %

1,098

971

13 %

3,024

2,888

5 %

TDS Telecom

Expenses excluding depreciation, amortization and accretion

190

175

9 %

539

517

4 %

Depreciation, amortization and accretion

53

49

8 %

158

147

8 %

(Gain) loss on asset disposals, net

3

1

N/M

4

2

N/M

246

224

10 %

702

665

6 %

All Other2

Expenses excluding depreciation and amortization

55

60

(8) %

171

153

12 %

Depreciation and amortization

4

4

(21) %

13

13

(21) %

(Gain) loss on asset disposals, net

—

(1)

N/M

—

—

N/M

59

64

(9) %

183

167

9 %

Total operating expenses

1,403

1,259

11 %

3,909

3,720

5 %

Operating income (loss)

UScellular

(15)

45

N/M

96

165

(42) %

TDS Telecom

10

27

(63) %

61

87

(30) %

All Other2

(6)

(3)

(66) %

(10)

(15)

35 %

(11)

69

N/M

147

237

(38) %

Investment and other income (expense)

Equity in earnings of unconsolidated entities

40

48

(16) %

123

138

(11) %

Interest and dividend income

4

3

39 %

10

9

16 %

Interest expense

(46)

(54)

13 %

(118)

(193)

38 %

Other, net

—

—

N/M

1

(1)

N/M

Total investment and other income (expense)

(2)

(3)

17 %

16

(47)

N/M

Income (loss) before income taxes

(13)

66

N/M

163

190

(15) %

Income tax expense (benefit)

(3)

19

N/M

62

38

59 %

Net income (loss)

(10)

47

N/M

101

152

(33) %

Less: Net income (loss) attributable to noncontrolling interests, net of tax

(2)

7

N/M

14

26

(46) %

Net income (loss) attributable to TDS shareholders

(8)

40

N/M

87

126

(30) %

TDS Preferred Share dividends

17

12

44 %

52

21

N/M

Net income (loss) attributable to TDS common shareholders

$ (25)

$ 28

N/M

$ 35

$ 105

(66) %

Basic weighted average shares outstanding

114

115

(1) %

114

115

—

Basic earnings (loss) per share attributable to TDS common shareholders

$ (0.22)

$ 0.24

N/M

$ 0.31

$ 0.91

(66) %

Diluted weighted average shares outstanding

114

116

(2) %

115

116

—

Diluted earnings (loss) per share attributable to TDS common shareholders

$ (0.22)

$ 0.24

N/M

$ 0.30

$ 0.89

(66) %

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

1

During the three months ended September 30, 2021, UScellular recorded a $9 million out-of-period error, which increased Service revenue by $9 million for the three and nine months ended September 30, 2021.

2

Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

Nine Months Ended

September 30,

2022

2021

(Dollars in millions)

Cash flows from operating activities

Net income

$ 101

$ 152

Add (deduct) adjustments to reconcile net income to net cash flows from operating activities

Depreciation, amortization and accretion

691

670

Bad debts expense

98

36

Stock-based compensation expense

32

35

Deferred income taxes, net

48

55

Equity in earnings of unconsolidated entities

(123)

(138)

Distributions from unconsolidated entities

100

107

Loss on impairment of licenses

3

—

(Gain) loss on asset disposals, net

13

17

(Gain) loss on sale of business and other exit costs, net

(1)

(1)

Other operating activities

7

51

Changes in assets and liabilities from operations

Accounts receivable

(59)

26

Equipment installment plans receivable

(131)

(44)

Inventory

(74)

12

Accounts payable

16

(56)

Customer deposits and deferred revenues

30

13

Accrued taxes

136

(43)

Accrued interest

10

4

Other assets and liabilities

4

(33)

Net cash provided by operating activities

901

863

Cash flows from investing activities

Cash paid for additions to property, plant and equipment

(794)

(726)

Cash paid for intangible assets

(603)

(1,268)

Cash received from investments

—

3

Cash received from divestitures and exchanges

8

2

Advance payments for license acquisitions

—

(20)

Other investing activities

(19)

3

Net cash used in investing activities

(1,408)

(2,006)

Cash flows from financing activities

Issuance of long-term debt

1,027

1,418

Repayment of long-term debt

(330)

(1,884)

Issuance of short-term debt

110

—

Repayment of short-term debt

(50)

—

Issuance of TDS Preferred Shares

—

1,110

TDS Common Shares reissued for benefit plans, net of tax payments

(4)

(5)

UScellular Common Shares reissued for benefit plans, net of tax payments

(5)

(16)

Repurchase of TDS Common Shares

(25)

(4)

Repurchase of UScellular Common Shares

(28)

(21)

Dividends paid to TDS shareholders

(114)

(81)

Payment of debt and equity issuance costs

(2)

(59)

Distributions to noncontrolling interests

(3)

(2)

Other financing activities

(2)

(4)

Net cash provided by financing activities

574

452

Net increase (decrease) in cash, cash equivalents and restricted cash

67

(691)

Cash, cash equivalents and restricted cash

Beginning of period

414

1,452

End of period

$ 481

$ 761

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)

ASSETS

September 30, 2022

December 31, 2021

(Dollars in millions)

Current assets

Cash and cash equivalents

$ 442

$ 367

Accounts receivable, net

1,181

1,151

Inventory, net

252

178

Prepaid expenses

94

103

Income taxes receivable

60

184

Other current assets

57

61

Total current assets

2,086

2,044

Assets held for sale

29

18

Licenses

4,689

4,097

Goodwill

547

547

Other intangible assets, net

210

197

Investments in unconsolidated entities

503

479

Property, plant and equipment, net

4,647

4,361

Operating lease right-of-use assets

1,010

1,040

Other assets and deferred charges

758

710

Total assets

$ 14,479

$ 13,493

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)

LIABILITIES AND EQUITY

September 30, 2022

December 31, 2021

(Dollars in millions, except per share amounts)

Current liabilities

Current portion of long-term debt

$ 16

$ 6

Accounts payable

506

481

Customer deposits and deferred revenues

266

236

Accrued interest

20

10

Accrued taxes

48

45

Accrued compensation

107

137

Short-term operating lease liabilities

146

141

Other current liabilities

300

124

Total current liabilities

1,409

1,180

Deferred liabilities and credits

Deferred income tax liability, net

967

921

Long-term operating lease liabilities

926

960

Other deferred liabilities and credits

867

759

Long-term debt, net

3,608

2,928

Noncontrolling interests with redemption features

12

11

Equity

TDS shareholders' equity

Series A Common and Common Shares, par value $0.01 per share

1

1

Capital in excess of par value

2,527

2,496

Preferred Shares, par value $0.01 per share

1,074

1,074

Treasury shares, at cost

(468)

(461)

Accumulated other comprehensive income

7

5

Retained earnings

2,763

2,812

Total TDS shareholders' equity

5,904

5,927

Noncontrolling interests

786

807

Total equity

6,690

6,734

Total liabilities and equity

$ 14,479

$ 13,493

Balance Sheet Highlights

(Unaudited)

September 30, 2022

TDS

TDS Corporate

Intercompany

TDS

UScellular

Telecom

& Other

Eliminations

Consolidated

(Dollars in millions)

Cash and cash equivalents

$ 254

$ 157

$ 196

$ (165)

$ 442

Licenses, goodwill and other intangible assets

$ 4,680

$ 760

$ 6

$ —

$ 5,446

Investment in unconsolidated entities

461

4

46

(8)

503

$ 5,141

$ 764

$ 52

$ (8)

$ 5,949

Property, plant and equipment, net

$ 2,631

$ 1,932

$ 84

$ —

$ 4,647

Long-term debt, net:

Current portion

$ 11

$ —

$ 5

$ —

$ 16

Non-current portion

3,115

3

490

—

3,608

$ 3,126

$ 3

$ 495

$ —

$ 3,624

TDS Telecom Highlights

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022

2021

2022

vs. 2021

2022

2021

2022

vs. 2021

(Dollars in millions)

Operating revenues

Residential

Wireline, Incumbent

$ 89

$ 87

2 %

$ 262

$ 258

2 %

Wireline, Expansion

13

9

43 %

35

24

48 %

Cable

68

66

3 %

203

197

3 %

Total residential

170

162

5 %

500

479

4 %

Commercial

43

45

(5) %

130

138

(6) %

Wholesale

43

44

(2) %

132

135

(2) %

Total service revenues

256

251

2 %

763

751

1 %

Equipment revenues

—

—

(13) %

1

1

(8) %

Total operating revenues

256

252

2 %

763

752

1 %

Cost of services

109

102

7 %

308

301

2 %

Cost of equipment and products

—

—

49 %

1

—

21 %

Selling, general and administrative expenses

81

72

12 %

231

216

7 %

Depreciation, amortization and accretion

53

49

8 %

158

147

8 %

(Gain) loss on asset disposals, net

3

1

N/M

4

2

N/M

Total operating expenses

246

224

10 %

702

665

6 %

Operating income

$ 10

$ 27

(63) %

$ 61

$ 87

(30) %

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022

2021

2022

2021

(Dollars in millions)

Cash flows from operating activities (GAAP)

$ 167

$ 384

$ 901

$ 863

Less: Cash paid for additions to property, plant and equipment

268

270

794

726

Free cash flow (Non-GAAP)1

$ (101)

$ 114

$ 107

$ 137

1

Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.