December 1, 2004
U.S. Cellular and TDS Telecom Complete Sale of Wireless Assets to ALLTEL
CHICAGO, Dec. 1 /PRNewswire-FirstCall/ -- United States Cellular Corporation and TDS Telecom, subsidiaries of Telephone and Data Systems, Inc. , today announced that they have each completed the sale of certain wireless properties, as previously announced on Aug. 4, 2004, to ALLTEL Communications, Inc. of Little Rock, Ark. for a total of approximately $144 million in cash (approximately $112 million after taxes), including a working capital adjustment.
LeRoy T. Carlson, Jr., president and chief executive officer of TDS, commented, "These sales illustrate TDS's strategy of redeploying capital to more strategic parts of our businesses. U.S. Cellular proceeds will help defray costs related to building out new markets, while the TDS Telecom proceeds will help fund several of its technology trials."John E. Rooney, president and chief executive officer of U.S. Cellular, said, "This transaction is a continuation of our strategy to exit markets that are not strategic to our long-term success. These properties, while valuable in their own right, do not complement the geographic footprint of the company nor strengthen its competitive position in our larger more well-established markets."
U.S. Cellular Assets
The U.S. Cellular assets sold to ALLTEL include operating markets and investment interests in several license areas. The operating markets are in one 25 megahertz (MHz) Metropolitan Statistical Area (MSA) license in Florida and one 25 MHz Rural Service Area (RSA) license in Ohio, representing an aggregate of 460,000 population equivalents and 35 cell sites. For the nine months ended Sept. 30, 2004, total revenue from these markets, which were included in U.S. Cellular's consolidated operations, was $15.3 million.
The U.S. Cellular investment interests are in five MSA licenses and two RSA licenses, representing an aggregate of 268,000 population equivalents in Ohio, North Carolina, Mississippi and Wisconsin. These assets are treated as investments; investment income from the assets is reported in "Investment Income" on U.S. Cellular's income statement.
U.S. Cellular received approximately $81 million in cash for the operating markets and investment interests.
TDS Telecom Assets
The TDS Telecom assets sold to ALLTEL include a majority interest in one RSA market in Georgia which has been operated by Alltel, representing 133,000 population equivalents, and an investment interest in one RSA market in Wisconsin, representing 5,000 population equivalents. Income from these assets is reported in "Other Income Net" on TDS's Income Statement. Proceeds were approximately $63 million in cash.
A complete list of the markets involved in the transactions can be found in Exhibit A.
Falkenberg Capital Corporation of Denver, Colo. represented U.S. Cellular and TDS Telecom in the transactions.
As of Sept. 30, U.S. Cellular Corporation, the nation's eighth largest wireless service carrier, provided wireless service to 4.8 million customers in 26 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support and a high-quality network.
TDS Telecom is a growing communications company serving more than 1 million residential and business customers in small rural and suburban communities in 30 states. The company's goal is to provide the most effective communication technology and high-quality services in its chosen markets. TDS Telecom is a subsidiary of Telephone and Data Systems, Inc., a diversified telecommunications corporation founded in 1969, that operates primarily by providing wireless and local telephone service through its strategic business units, U.S. Cellular and TDS Telecom. Telephone and Data Systems, Inc. is a FORTUNE 500 company.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: changes in circumstances or events that may affect the ability of U.S. Cellular to start up the operations of the licensed areas involved in the AT&T Wireless transaction completed in August 2003; the ability of U.S. Cellular to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in the overall economy; changes in competition in the markets in which TDS and U.S. Cellular operate; advances in telecommunications technology, including Voice over Internet Protocol; the impact of local number portability; changes to access and pricing of unbundled network elements; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; changes in the capital markets that could adversely impact the availability, cost and terms of financing; an adverse change in the ratings afforded TDS and U.S. Cellular debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly service revenue per unit, churn rates, roaming rates and the mix of products and services offered in TDS and U.S. Cellular markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in documents filed by TDS and U.S. Cellular with the Securities and Exchange Commission.
U.S. Cellular's web site is: http://www.uscellular.com/ .
TDS Telecom's web site is: http://www.tdstelecom.com/ .
Exhibit A follows.
Markets (25 MHz) included in the proposed ALLTEL transaction
Operating Total Market Population
Markets Market No. Population Ownership Equivalents
Fort Pierce, Fla. MSA 208 340,399 100% 340,399
Ohio 9 RSA 593 243,570 49% 119,349
U.S. Cellular Total Market Population
Investments Market No. Population Ownership Equivalents
Raleigh-Durham / MSAs
Fayetteville / 071 / 149
Burlington, N.C. / 280 1,477,252 8.0% 117,885
Jackson, Miss. MSA 106 447,689 6.6% 29,547
Eau Claire, Wis. MSA 232 151,986 44.5% 67,634
Ohio 2 RSA 586 259,296 10.8% 28,115
Ohio 5 RSA 589 240,235 10.4% 24,986
TDS Telecom Total Market Population
Investments Market No. Population Ownership Equivalents
Georgia 12 RSA 382 228,650 58.3% 133,303
Wisconsin 8 RSA 715 244,092 2.0% 4,882
ALLTEL Communications, Inc.
United States Cellular Corporation; Telephone and Data Systems, Inc.;
Web site: http://www.uscellular.com/http://www.tdstelecom.com/http://www.teldta.com/