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Last updated on April 16, 2014 at 7:15 EDT

TDS Reports First Quarter 2013 Results

May 3, 2013

U.S. Cellular to offer Apple products later this year; updates 2013 guidance

CHICAGO, May 3, 2013 /PRNewswire/ — As previously announced, TDS will hold a teleconference May 3, 2013 at 9:30 a.m. CDT. Interested parties may listen to the call live by accessing the Investor Relations page of www.teldta.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported operating revenues of $1,308.6 million for the first quarter of 2013, versus $1,305.8 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $1.4 million and $0.01 respectively, for the first quarter of 2013, compared to $52.3 million and $0.48, respectively, in the comparable period one year ago.

As previously announced on Nov. 7, 2012, U.S. Cellular reached a definitive agreement to sell its Chicago, St. Louis, central Illinois and three other markets (the “Divestiture Markets”) to subsidiaries of Sprint Nextel Corporation (NYSE:S) for $480 million (the “Divestiture Transaction”). The transaction has been approved by the FCC and is expected to close in the second quarter 2013.

“U.S. Cellular and TDS Telecom moved forward aggressively with their strategic initiatives, though higher smartphone subsidies, reductions in regulatory support, and investment spending continued to impact profitability,” said LeRoy T. Carlson, Jr., TDS president and CEO.

“U.S. Cellular further expanded customer access to 4G LTE speeds and devices in its core markets, driving growth in smartphone penetration, data use and postpaid ARPU. Through its distribution with Walmart, U.S. Cellular increased net prepaid customer additions. Postpaid gross customer additions in core markets were flat, and elevated churn resulted in a net customer loss. To drive customer growth and reduce churn, U.S. Cellular will begin offering Apple products later this year, adding to its strong portfolio of iconic devices, like the recently launched 4G LTE Samsung Galaxy S® 4. U.S. Cellular continued its efforts to expand distribution in April by offering postpaid service through Sam’s Club locations in 14 states, and the company is aggressively targeting key segments like small and medium businesses.

“TDS Telecom continued to build its ILEC residential customer base with TDS TV® and faster broadband speeds, and increased average revenue per ILEC residential connection. The company’s residential strategy is to increase broadband and video penetration through service bundling. TDS Telecom maintained strong sales of its commercial managedIP products, and plans to continue to expand the portfolio. Hosted and managed services revenues were driven primarily by a 2012 acquisition, as the HMS business continues to integrate its offerings to provide comprehensive, end-to-end IT solutions to mid-market customers. In February, TDS Telecom announced an agreement to acquire cable company Baja Broadband, which will expand the company’s customer base and provide opportunities for future growth.”

2013 ESTIMATES

Estimates of full-year 2013 results for U.S. Cellular, TDS Telecom and TDS are shown below. Such estimates represent management’s view as of the date of filing of TDS’ Form 10-Q for the quarter ended March 31, 2013. Such forward-looking statements should not be assumed to be current as of any future date. TDS undertakes no duty to update such information, whether as a result of new information, future events or otherwise. There can be no assurance that final results will not differ materially from such estimated results.

                                             2013 Estimated Results (1)
                                              -------------------------

                       U.S. Cellular (2)                                               TDS Telecom (3)                    TDS (2)(3)(7)
                        ----------------                                               --------------                      ------------

                            Previous                             Current                                         Previous    Current            Previous              Current
                            --------                             -------                                         --------    -------            --------              -------

    (Dollars in
     millions)

    Adjusted operating
      revenues (4)                  $3,765-$3,885                        $3,620-$3,740                 Unchanged                      $850-$900         $4,660-$4,830         $4,515-$4,685

    Adjusted income
     before  income
     taxes (5) (8)                      $780-$900                            $595-$715                 Unchanged                      $220-$250           $995-$1,145             $810-$960

    Capital
     expenditures                    Approx. $600                         Approx. $735                 Unchanged                   Approx. $155          Approx. $765          Approx. $900

             (1)   These estimates are based on TDS'
                   current plans, which include an
                   expansion of the multi-year
                   deployment of 4G LTE technology
                   which commenced in 2011; such
                   expansion includes deployment in
                   additional markets as well as
                   deployment on the 850 MHz band to
                   provide additional capacity for
                   future growth in data usage, enable
                   potential future 4G LTE roaming, and
                   support the sale of Apple products.
                   These estimates also reflect the
                   estimated impacts of selling Apple
                   products and the deconsolidation of
                   certain partnerships that will be
                   accounted for as equity method
                   investments effective April 3, 2013
                   at U.S. Cellular, and a multi-year
                   deployment of IPTV which commenced
                   in 2011 at TDS Telecom.  New
                   developments or changing conditions
                   (such as, but not limited to,
                   regulatory developments, customer
                   net growth, customer demand for data
                   services, costs to deploy,
                   agreements for content or
                   franchises, or possible
                   acquisitions, dispositions or
                   exchanges) could affect TDS' plans
                   and, therefore, its 2013 estimated
                   results.

             (2)   These estimates assume the
                   Divestiture Transaction closes in
                   the second quarter of 2013.  Actual
                   effects could vary significantly
                   from these estimates as a result of
                   a change in the expected timing of
                   the Divestiture Transaction or
                   changes in other terms and
                   conditions of the sale.

                   These estimates reflect U.S.
                   Cellular's consolidated results for
                   2013.  Estimated results reflecting
                   U.S. Cellular's Divestiture Markets
                   and Core Markets are shown in the
                   table below:

                                           2013 Estimated Results
                                           ----------------------

                         U.S. Cellular Core                       U.S. Cellular
                                                                   Divestiture              U.S. Cellular

                            Markets (6)                           Markets (6)              Consolidated (6)
                             ----------                            ----------              ---------------

                              Previous                              Current                    Previous           Current           Previous               Current
                              --------                              -------                    --------           -------           --------               -------

    (Dollars in
     millions)

    Adjusted operating
     revenues (4)                      $3,600-$3,700                         $3,475-$3,575              $165-$185         $145-$165          $3,765-$3,885         $3,620-$3,740

    Adjusted income
     before income taxes
     (5) (8)                               $765-$865                             $560-$660                $15-$35           $35-$55              $780-$900             $595-$715

    Capital expenditures                Approx. $600                          Approx. $730                      -                $5           Approx. $600          Approx. $735

             (3)   These estimates do not reflect
                   the effects of the acquisition
                   of Baja.

             (4)   Adjusted operating revenues is a
                   non-GAAP financial measure
                   defined as Operating revenues
                   excluding U.S. Cellular
                   Equipment sales revenues. U.S.
                   Cellular Equipment sales
                   revenues are excluded from
                   Adjusted operating revenues
                   since U.S. Cellular equipment is
                   generally sold at a net loss,
                   and such net loss that results
                   from U.S. Cellular Equipment
                   sales revenues less U.S.
                   Cellular Cost of equipment sold
                   is viewed as a cost of earning
                   service revenues for purposes of
                   assessing business results.  For
                   purposes of developing this
                   guidance, TDS does not calculate
                   an estimate of U.S. Cellular
                   Equipment sales revenues.  TDS
                   believes this measure provides
                   useful information to investors
                   regarding TDS' results of
                   operations. Adjusted operating
                   revenues is not a measure of
                   financial performance under GAAP
                   and should not be considered as
                   an alternative to Operating
                   revenues as an indicator of the
                   Company's operating performance.

             (5)   Adjusted income before income
                   taxes is a non-GAAP financial
                   measure defined as Income before
                   income taxes, adjusted for:
                   Depreciation, amortization and
                   accretion, net Gain or loss on
                   sale of business and other exit
                   costs (if any), and Interest
                   expense. Adjusted income before
                   income taxes is not a measure of
                   financial performance under GAAP
                   and should not be considered as
                   an alternative to Income before
                   income taxes as an indicator of
                   the Company's operating
                   performance or as an alternative
                   to Cash flows from operating
                   activities, determined in
                   accordance with GAAP, as an
                   indicator of cash flows or as a
                   measure of liquidity.  TDS
                   believes Adjusted income before
                   income taxes is a meaningful
                   measure of TDS' operating
                   results before significant
                   recurring non-cash charges,
                   gains and losses and financing
                   charges (Interest expense) in
                   order to show operating results
                   on a more comparable basis from
                   period to period.  TDS does not
                   intend to imply that any of such
                   amounts that are excluded are
                   non-recurring, infrequent or
                   unusual; such amounts may occur
                   in the future. The following
                   tables provide a reconciliation
                   of Income (loss) before income
                   taxes to Adjusted income before
                   income taxes for 2013 Estimated
                   Results and 2012 actual results:

                                           2013 Current Estimated Results
                                           ------------------------------

                         U.S. Cellular Core                U.S. Cellular Divestiture Markets
                                                                         (2)(6)               U.S. Cellular Consolidated (6)      TDS             TDS (7)

                             Markets (6)                                                                                        Telecom
                             ----------                                                                                         -------

    (Dollars in
     millions)

    Income (loss) before
     income taxes (8)                  ($30)-$70                                ($215)-($195)                     ($245)-($125)           $25-$55         ($285)-($135)

    Depreciation,
     amortization and
     accretion expense
     (9)                            Approx. $540                                 Approx. $250                      Approx. $790      Approx. $195          Approx. $990

    Interest expense                 Approx. $50                                            -                       Approx. $50                 -          Approx. $105
                                     -----------                                          ---                       -----------               ---          ------------

    Adjusted income
     before income taxes               $560-$660                                      $35-$55                         $595-$715         $220-$250             $810-$960
                                       =========                                      =======                         =========         =========             =========

                                                                Actual Results
                                                                --------------

                         Three Months Ended March 31, 2013                     Year Ended December 31, 2012
                         ---------------------------------                     ----------------------------

                                U.S. Cellular Consolidated (6)                            TDS               TDS (7)     U.S. Cellular Consolidated (6)      TDS         TDS (7)

                                                                                        Telecom                                                           Telecom
                                                                                        -------                                                           -------

    (Dollars in
     millions)

    Income before income
     taxes                                                    $18                                     $9            $11                              $205          $45           $196

    Depreciation,
     amortization and
     accretion expense
     (9)                                                      190                                     50            242                               609          193            814

    (Gain) loss on sale
     of business                                                7                                      -              7                                21            -             21

      and other exit
       costs, net

    Interest expense
     (Capitalized
     interest)                                                 11                                     (1)            25                                42           (1)            87
                                                              ---                                    ---            ---                               ---          ---            ---

    Adjusted income
     before income taxes                                     $226                                    $58           $285                              $877         $237         $1,118
                                                             ====                                    ===           ====                              ====         ====         ======

    (6)            The U.S. Cellular Consolidated amounts represent GAAP
                   financial measures and include the results of both the
                   Core Markets and the Divestiture Markets. The amounts
                   for Core Markets and Divestiture Markets represent non-
                   GAAP financial measures. TDS believes that the amounts
                   for the Core Markets and Divestiture Markets may be
                   useful to investors and other users of its financial
                   information in evaluating the separate results for the
                   Core Markets. Divestiture Markets are comprised of U.S.
                   Cellular's Chicago, central Illinois, St. Louis and
                   certain Indiana/Michigan/Ohio markets. Core Markets
                   are comprised of all other markets in which U.S.
                   Cellular conducts business including Peoria, Rockford
                   and certain other areas in Illinois, and in Columbia,
                   Joplin, Jefferson City and certain other areas in
                   Missouri. Core Markets as defined also includes any
                   other income or expenses due to U.S. Cellular's direct
                   or indirect ownership interests in other spectrum in the
                   Divestiture Markets which was not included in the sale
                   and other retained assets from the Divestiture Markets.

    (7)            The TDS column includes U.S. Cellular, TDS Telecom and
                   also the impacts of consolidating eliminations,
                   corporate operations and non-reportable segments, all
                   of which are not presented above.

    (8)            This amount does not include any estimate for (Gain) loss
                   on sale of business and other exit costs, net, as the
                   timing of such amount is not readily estimable.

    (9)            The 2013 estimated amounts for depreciation, amortization
                   and accretion expense in the U.S. Cellular Divestiture
                   Markets include approximately $185 million of
                   incremental accelerated depreciation, amortization and
                   accretion resulting from the Divestiture Transaction.
                   Actual results for the three months ended March 31, 2013
                   and the year ended December 31, 2012 include $38 million
                   and $20 million, respectively, of incremental
                   accelerated depreciation, amortization and accretion
                   resulting from the Divestiture Transaction.

Conference Call Information
TDS will hold a conference call on May 3, 2013 at 9:30 a.m. CDT.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Investor Relations page of www.teldta.com. The call will be archived on the Conference Calls page of www.teldta.com.

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless; broadband, TV and voice; and hosted and managed services to approximately 7 million customers nationwide through its business units, U.S. Cellular, TDS Telecom and TDS Hosted & Managed Services. Founded in 1969 and headquartered in Chicago, TDS employed 12,300 people as of March 31, 2013.

Visit www.teldta.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

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, projections, and assumptions, 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: impacts of the pending acquisition and divestiture transactions, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transaction and the financial impacts of such transaction; the ability of the company to successfully manage and grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission (“SEC”), which are incorporated by reference herein.

For more information about TDS and its subsidiaries, visit:

TDS: www.teldta.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com

                                                                                                                                                               United States Cellular Corporation

                                                                                                                                                        Total Markets Summary Operating Data (Unaudited)

    Quarter Ended                                                3/31/2013                                    12/31/2012                                       9/30/2012                 6/30/2012                                     3/31/2012
                                                                 ---------                                    ----------                                       ---------                 ---------                                     ---------

    Retail Customers

                          Postpaid

                          Total at end of period (1)                                             5,060,000                                                   5,134,000                                                   5,175,000                                                   5,213,000                                                   5,261,000

                          Gross additions                                                          191,000                                                     241,000                                                     230,000                                                     199,000                                                     210,000

                          Net additions (losses)                                                   (74,000)                                                    (41,000)                                                    (38,000)                                                    (48,000)                                                    (38,000)

                          ARPU (2)                                                                  $54.85                                                      $54.56                                                      $54.34                                                      $54.42                                                      $54.00

                          Churn rate (3)                                                               1.7%                                                        1.8%                                                        1.7%                                                        1.6%                                                        1.6%

                          Smartphone penetration (4) (5)                                              43.5%                                                       41.8%                                                       38.6%                                                       36.8%                                                       34.4%

                          Prepaid

                          Total at end of period                                                   446,000                                                     423,000                                                     386,000                                                     329,000                                                     309,000

                          Gross additions                                                          104,000                                                     107,000                                                     120,000                                                      78,000                                                      63,000

                          Net additions (losses)                                                    23,000                                                      37,000                                                      57,000                                                      20,000                                                       4,000

                          ARPU (2)                                                                  $33.31                                                      $33.56                                                      $32.97                                                      $33.59                                                      $33.17

                          Churn rate (3)                                                               6.2%                                                        5.8%                                                        5.9%                                                        6.2%                                                        6.4%

    Total customers at end of period (1)                                                         5,736,000                                                   5,798,000                                                   5,808,000                                                   5,799,000                                                   5,837,000

    Billed ARPU (2)                                                                                 $51.13                                                      $50.94                                                      $50.83                                                      $50.99                                                      $50.52

    Service revenue ARPU (2)                                                                        $57.63                                                      $58.00                                                      $59.57                                                      $59.05                                                      $58.21

    Smartphones sold as a percent of total devices sold                                               61.7%                                                       62.9%                                                       53.0%                                                       51.9%                                                       54.1%

    Total population

                          Consolidated markets (6)                                              93,943,000                                                  93,244,000                                                  92,996,000                                                  92,684,000                                                  92,684,000

                           Consolidated operating markets
                            (6)                                                                 47,440,000                                                  46,966,000                                                  46,966,000                                                  46,966,000                                                  46,966,000

    Market penetration at end of period

                          Consolidated markets (7)                                                     6.1%                                                        6.2%                                                        6.2%                                                        6.3%                                                        6.3%

                           Consolidated operating markets
                            (7)                                                                       12.1%                                                       12.3%                                                       12.4%                                                       12.3%                                                       12.4%

    Capital expenditures (000s)                                                                   $118,400                                                    $253,100                                                    $199,100                                                    $183,200                                                    $201,300

    Total cell sites in service                                                                      8,027                                                       8,028                                                       7,984                                                       7,932                                                       7,875

    Owned towers in service                                                                          4,411                                                       4,408                                                       4,377                                                       4,346                                                       4,318

                                                                                                                                                               United States Cellular Corporation

                                                                                                                                                         Core Markets Summary Operating Data (Unaudited)

    Quarter Ended                                                3/31/2013                                    12/31/2012                                       9/30/2012                 6/30/2012                                     3/31/2012
                                                                 ---------                                    ----------                                       ---------                 ---------                                     ---------

    Retail Customers

                          Postpaid

                          Total at end of period (1)                                             4,639,000                                                   4,672,000                                                   4,688,000                                                   4,708,000                                                   4,736,000

                          Gross additions                                                          184,000                                                     218,000                                                     204,000                                                     176,000                                                     182,000

                          Net additions (losses)                                                   (32,000)                                                    (16,000)                                                    (20,000)                                                    (28,000)                                                    (21,000)

                          ARPU (2)                                                                  $54.23                                                      $53.92                                                      $53.68                                                      $53.70                                                      $53.25

                          Churn rate (3)                                                               1.5%                                                        1.7%                                                        1.6%                                                        1.4%                                                        1.4%

                          Smartphone penetration (4) (5)                                              43.0%                                                       41.1%                                                       37.8%                                                       36.0%                                                       34.3%

                          Prepaid

                          Total at end of period                                                   373,000                                                     342,000                                                     305,000                                                     246,000                                                     223,000

                          Gross additions                                                           92,000                                                      86,000                                                     100,000                                                      59,000                                                      42,000

                          Net additions (losses)                                                    31,000                                                      38,000                                                      59,000                                                      23,000                                                       5,000

                          ARPU (2)                                                                  $32.92                                                      $33.21                                                      $33.09                                                      $33.37                                                      $32.69

                          Churn rate (3)                                                               5.7%                                                        5.0%                                                        5.0%                                                        5.2%                                                        5.6%

    Total customers at end of period (1)                                                         5,225,000                                                   5,238,000                                                   5,223,000                                                   5,196,000                                                   5,210,000

    Billed ARPU (2)                                                                                 $50.65                                                      $50.43                                                      $50.34                                                      $50.43                                                      $49.91

    Service revenue ARPU (2)                                                                        $57.37                                                      $57.90                                                      $59.66                                                      $59.03                                                      $58.20

    Smartphones sold as a percent of total devices sold                                               62.1%                                                       62.9%                                                       53.0%                                                       52.0%                                                       54.1%

    Total population

                          Consolidated markets (6)                                              84,625,000                                                  83,864,000                                                  83,075,000                                                  82,763,000                                                  82,763,000

                           Consolidated operating markets
                            (6)                                                                 32,422,000                                                  31,925,000                                                  31,590,000                                                  31,590,000                                                  31,590,000

    Market penetration at end of period

                          Consolidated markets (7)                                                     6.2%                                                        6.2%                                                        6.3%                                                        6.3%                                                        6.3%

                           Consolidated operating markets
                            (7)                                                                       16.1%                                                       16.4%                                                       16.5%                                                       16.4%                                                       16.5%

    Capital expenditures (000s)                                                                   $113,300                                                    $241,400                                                    $184,100                                                    $163,600                                                    $179,700

    Total cell sites in service                                                                      6,277                                                       6,292                                                       6,251                                                       6,199                                                       6,146

    Owned towers in service                                                                          3,846                                                       3,847                                                       3,818                                                       3,787                                                       3,761

             (1)   Includes
                   176,000 and
                   168,000
                   postpaid
                   customers at
                   March 31, 2013
                   and 2012,
                   respectively,
                   related to the
                   St. Lawrence
                   Seaway RSA
                   Cellular
                   Partnership
                   ("NY1") and
                   New York RSA 2
                   Cellular
                   Partnership
                   ("NY2" and,
                   together with
                   NY1, the
                   "Partnerships").

             (2)   ARPU metrics
                   are calculated
                   by dividing a
                   revenue base
                   by an average
                   number of
                   customers by
                   the number of
                   months in the
                   period.  These
                   revenue bases
                   and customer
                   populations
                   are shown
                   below:

                                 a.   Postpaid ARPU consists of
                                      total postpaid service
                                      revenues and postpaid
                                      customers.

                                 b.   Prepaid ARPU consists of
                                      total prepaid service
                                      revenues and prepaid
                                      customers.

                                 c.   Billed ARPU consists of total
                                       retail service revenues and
                                       postpaid, prepaid and
                                       reseller customers.

                                 d.   Service revenue ARPU consists
                                      of total retail service
                                      revenues, inbound roaming
                                      and other service revenues
                                      and postpaid, prepaid and
                                      reseller customers.

             (3)   Churn metrics
                   represent the
                   percentage of
                   the postpaid
                   or prepaid
                   customers that
                   disconnect
                   service each
                   month. These
                   metrics
                   represent the
                   average
                   monthly
                   postpaid or
                   prepaid churn
                   rate for each
                   respective
                   period.

             (4)   Smartphones
                   represent
                   wireless
                   devices which
                   run on an
                   AndroidTM,
                   BlackBerry(R)
                   or Windows
                   Mobile(R)
                   operating
                   system,
                   excluding
                   tablets.

             (5)   Smartphone
                   penetration is
                   calculated by
                   dividing
                   postpaid
                   smartphone
                   customers by
                   total postpaid
                   customers.

             (6)   Used only to
                   calculate
                   market
                   penetration of
                   consolidated
                   markets and
                   consolidated
                   operating
                   markets,
                   respectively.
                   See footnote
                   (7) below.

             (7)   Market
                   penetration is
                   calculated by
                   dividing the
                   number of
                   wireless
                   customers at
                   the end of the
                   period by the
                   total
                   population of
                   consolidated
                   markets and
                   consolidated
                   operating
                   markets,
                   respectively,
                   as estimated
                   by
                   Claritas(R).

                                                                                                              TDS Telecom

                                                                                                   Summary Operating Data (Unaudited)

    Quarter Ended                                                      3/31/2013                             12/31/2012                           9/30/2012                           6/30/2012                           3/31/2012
                                                                       ---------                             ----------                           ---------                           ---------                           ---------

    TDS Telecom

    ILEC:

                    Residential
                    Connections

                   Physical access lines (1)                           345,500                                350,100                             355,800                             360,100                             363,500

                   Broadband connections (2)                           221,900                                221,700                             223,100                             222,400                             219,500

                   IPTV customers                                        9,000                                  7,900                               6,700                               5,600                               4,900
                                                                         -----                                  -----                               -----                               -----                               -----

                      ILEC residential connections                     576,400                                579,700                             585,600                             588,100                             587,900
                                                                       =======                                =======                             =======                             =======                             =======

                    Commercial
                    Connections

                   Physical access lines (1)                           106,000                                107,600                             109,800                             111,100                             112,600

                   Broadband connections (2)                            18,400                                 18,500                              18,500                              18,400                              18,200

                   managedIP connections (3)                            18,400                                 17,200                              15,000                              13,200                              10,800
                                                                        ------                                 ------                              ------                              ------                              ------

                      ILEC commercial connections                      142,800                                143,300                             143,300                             142,700                             141,600
                                                                       =======                                =======                             =======                             =======                             =======

    CLEC:

                    Residential
                    Connections

                   Physical access lines (1)                            23,000                                 24,600                              26,200                              27,900                              29,600

                   Broadband connections (2)                             7,700                                  8,200                               8,900                               9,500                              10,100
                                                                         -----                                  -----                               -----                               -----                              ------

                      CLEC residential connections                      30,700                                 32,800                              35,100                              37,400                              39,700
                                                                        ======                                 ======                              ======                              ======                              ======

                    Commercial
                    Connections

                   Physical access lines (1)                           129,700                                135,500                             140,300                             145,100                             151,100

                   Broadband connections (2)                            10,400                                 11,200                              12,000                              12,800                              13,700

                   managedIP connections (3)                            85,000                                 77,400                              69,500                              61,400                              53,700
                                                                        ------                                 ------                              ------                              ------                              ------

                      CLEC commercial connections                      225,100                                224,100                             221,800                             219,300                             218,500
                                                                       =======                                =======                             =======                             =======                             =======

    Total ILEC and CLEC Customer Connections                           975,000                                979,900                             985,800                             987,500                             987,700
                                                                       =======                                =======                             =======                             =======                             =======

    (1)            Individual circuits connecting
                   customers to TDS Telecom's central
                   office facilities.

    (2)            The number of customers provided high-
                   capacity data circuits via various
                   technologies, including DSL and
                   dedicated Internet circuit
                   technologies.

    (3)            The number of telephone handsets, data
                   lines and IP trunks providing
                   communications using IP networking
                   technology.

                                          TDS Telecom

                                  Capital Expenditures (000s)

     Quarter
     Ended   3/31/2013 12/31/2012                             9/30/2012 6/30/2012 3/31/2012
             --------- ----------                             --------- --------- ---------

    ILEC       $22,400    $43,400                               $33,700   $32,500   $27,500

    CLEC         5,500      6,100                                 5,400     4,900     5,100

    HMS          2,600      2,300                                 4,400     5,500     3,100
                 -----      -----                                 -----     -----     -----

               $30,500    $51,800                               $43,500   $42,900   $35,700
               =======    =======                               =======   =======   =======

                                                                                                       Telephone and Data Systems, Inc.

                                                                                                Consolidated Statement of Operations Highlights

                                                                                                         Three Months Ended March 31,

                                                                                    (Unaudited, dollars and shares in thousands, except per share amounts)

                                                                                                                                                                                                           Increase/ (Decrease)
                                                                                                                                                                                                          ---------------------

                                                                                                    2013                      2012                   Amount       Percent
                                                                                                    ----                      ----                   ------       -------

    Operating revenues

                                           U.S. Cellular                                      $1,081,746                              $1,092,121                                $(10,375)                               (1%)

                                           TDS Telecom                                           217,061                                 204,075                                  12,986                                  6%

                                           All Other (1)                                           9,766                                   9,595                                     171                                  2%

                                                                                                             1,308,573                               1,305,791                                 2,782                                                -
                                                                                                             ---------                               ---------                                 -----

    Operating expenses

                                           U.S. Cellular

                                            Expenses
                                            excluding
                                            depreciation,
                                            amortization
                                            and accretion                                        878,070                                 862,444                                  15,626                                  2%

                                            Depreciation,
                                            amortization
                                            and accretion                                        189,845                                 146,685                                  43,160                                 29%

                                            Loss on asset
                                            disposals,
                                            net                                                    5,434                                   2,003                                   3,431                              >100%

                                            (Gain) loss on
                                            sale of
                                            business and
                                            other exit
                                            costs, net                                             6,931                                  (4,213)                                 11,144                            >(100%)
                                                                                                   -----                                  ------                                  ------

                                                                                                             1,080,280                               1,006,919                                73,361                                                7%
                                                                                                             ---------                               ---------                                ------

                                           TDS Telecom

                                            Expenses
                                            excluding
                                            depreciation,
                                            amortization
                                            and accretion                                        159,486                                 143,420                                  16,066                                 11%

                                            Depreciation,
                                            amortization
                                            and accretion                                         49,491                                  47,443                                   2,048                                  4%

                                            Loss on asset
                                            disposals,
                                            net                                                      193                                     120                                      73                                 61%
                                                                                                     ---                                     ---                                     ---

                                                                                                               209,170                                 190,983                                18,187                                               10%
                                                                                                               -------                                 -------                                ------

                                           All Other (1)

                                            Expenses
                                            excluding
                                            depreciation
                                            and
                                            amortization                                           9,239                                  10,946                                  (1,707)                              (16%)

                                            Depreciation
                                            and
                                            amortization                                           2,741                                   3,306                                    (565)                              (17%)

                                            Gain on asset
                                            disposals,
                                            net                                                      (11)                                     (5)                                     (6)                             >100%
                                                                                                     ---                                     ---                                     ---

                                                                                                                11,969                                  14,247                                (2,278)                                            (16%)
                                                                                                                ------                                  ------                                ------

                                                                Total operating expenses                     1,301,419                               1,212,149                                89,270                                                7%
                                                                                                             ---------                               ---------                                ------

    Operating income (loss)

                                           U.S. Cellular                                           1,466                                  85,202                                 (83,736)                              (98%)

                                           TDS Telecom                                             7,891                                  13,092                                  (5,201)                              (40%)

                                           All Other  (1)                                         (2,203)                                 (4,652)                                  2,449                                 53%

                                                                                                                 7,154                                  93,642                               (86,488)                                            (92%)
                                                                                                                 -----                                  ------                               -------

    Investment and other income (expense)

                                            Equity in earnings
                                            of unconsolidated
                                            entities                                              27,089                                  23,389                                   3,700                                 16%

                                            Interest and
                                            dividend income                                        1,578                                   2,183                                    (605)                              (28%)

                                           Interest expense                                      (24,498)                                (24,464)                                    (34)                                 -

                                           Other, net                                               (154)                                    228                                    (382)                           >(100%)

                                            Total
                                            investment
                                            and other
                                            income                                                 4,015                                   1,336                                   2,679                              >100%
                                                                                                   -----                                   -----                                   -----

    Income before income taxes                                                                                  11,169                                  94,978                               (83,809)                                            (88%)

                                           Income tax expense                                      4,180                                  27,412                                 (23,232)                              (85%)

    Net income                                                                                                   6,989                                  67,566                               (60,577)                                            (90%)

                                            Less: Net income
                                            attributable to
                                            noncontrolling
                                            interests, net of
                                            tax                                                   (5,570)                                (15,312)                                  9,742                                 64%

    Net income attributable to TDS shareholders                                                                  1,419                                  52,254                               (50,835)                                            (97%)

                                            Preferred dividend
                                            requirement                                              (12)                                    (12)                                                 -                                                -

    Net income available to common shareholders                                                                 $1,407                                 $52,242                              $(50,835)                                            (97%)
                                                                                                                ======                                 =======                              ========

    Basic weighted average shares outstanding                                                                  108,255                                 108,653                                  (398)                                               -

    Basic earnings per share attributable to TDS
     shareholders                                                                                                $0.01                                   $0.48                                $(0.47)                                            (98%)

    Diluted weighted average shares outstanding                                                                108,693                                 109,098                                  (405)                                               -

    Diluted earnings per share attributable to TDS
     shareholders                                                                                                $0.01                                   $0.48                                $(0.47)                                            (98%)

             (1)   Consists of Suttle Straus
                   printing and distribution
                   operations, Airadigm, corporate
                   operations and intercompany
                   eliminations.

    N/M - Percentage change not meaningful

                                                    Telephone and Data Systems, Inc.

                                                 Consolidated Balance Sheet Highlights

                                                   (Unaudited, dollars in thousands)

                                                                 ASSETS

                                                                               March 31,            December 31,

                                                                                    2013                    2012
                                                                                    ----                    ----

    Current assets

                                       Cash and cash equivalents                           $766,700                $740,481

                                       Short-term investments                               125,595                 115,700

                                        Accounts receivable from customers
                                        and others                                          506,710                 574,328

                                       Inventory                                            143,832                 160,692

                                       Net deferred income tax asset                         44,288                  43,411

                                       Prepaid expenses                                      86,879                  86,385

                                       Income taxes receivable                               11,301                   9,625

                                       Other current assets                                  30,498                  32,815

                                                                                          1,715,803               1,763,437

    Assets held for sale                                                                    160,073                 163,242

    Investments

                                       Licenses                                           1,494,189               1,480,039

                                       Goodwill                                             797,194                 797,194

                                       Other intangible assets, net                          55,557                  58,522

                                        Investments in unconsolidated
                                        entities                                            201,171                 179,921

                                       Long-term investments                                 40,142                  50,305

                                       Other investments                                        778                     824

                                                                                          2,589,031               2,566,805

    Property, plant and equipment, net

                                       U.S. Cellular                                      2,948,508               3,022,588

                                       TDS Telecom                                          918,861                 934,188

                                       Other                                                 39,226                  40,490

                                                                                          3,906,595               3,997,266

    Other assets and deferred charges                                                       130,321                 133,150
                                                                                            -------                 -------

    Total assets                                                                         $8,501,823              $8,623,900
                                                                                         ==========              ==========

                                                                     Telephone and Data Systems, Inc.

                                                                  Consolidated Balance Sheet Highlights

                                                                    (Unaudited, dollars in thousands)

                                                                          LIABILITIES AND EQUITY

                                                                              March 31,                                December 31,

                                                                                   2013                                        2012
                                                                                   ----                                        ----

    Current liabilities

                      Current portion
                      of long-term
                      debt                                                       $1,318                                                  $1,233

                     Accounts payable                                           335,065                                                 377,291

                      Customer
                      deposits and
                      deferred
                      revenues                                                  231,478                                                 222,345

                     Accrued interest                                            15,774                                                   6,565

                     Accrued taxes                                               55,944                                                  48,237

                      Accrued
                      compensation                                               75,324                                                 134,932

                      Other current
                      liabilities                                               102,208                                                 134,005
                                                                                -------                                                 -------

                                                                                                             817,111                                                 924,608

    Liabilities held for sale                                                                                 18,360                                                  19,594

    Deferred liabilities and credits

                      Net deferred
                      income tax
                      liability                                                 867,954                                                 862,580

                      Other deferred
                      liabilities and
                      credits                                                   445,614                                                 438,727

    Long-term debt                                                                                         1,721,338                                               1,721,571

    Noncontrolling interests with redemption features                                                            466                                                     493

    Equity

                      TDS shareholders'
                      equity

                      Series A Common
                      and Common
                      Shares, par
                      value $.01                                                  1,327                                                   1,327

                      Capital in
                      excess of par
                      value                                                   2,302,785                                               2,304,122

                      Treasury shares,
                      at cost                                                  (747,831)                                               (750,099)

                      Accumulated
                      other
                      comprehensive
                      loss                                                       (8,303)                                                 (8,132)

                      Retained
                      earnings                                                2,449,720                                               2,464,318
                                                                              ---------                                               ---------

                                            Total TDS shareholders' equity                                 3,997,698                                               4,011,536

                     Preferred shares                                               825                                                     825

                      Noncontrolling
                      interests                                                 632,457                                                 643,966

                     Total equity                                             4,630,980                                               4,656,327

    Total liabilities and equity                                                                          $8,501,823                                              $8,623,900
                                                                                                          ==========                                              ==========

                                                                                                                                  Balance Sheet Highlights

                                                                                                                                       March 31, 2013

                                                                                                                              (Unaudited, dollars in thousands)

                                               U.S.                                    TDS                      TDS Corporate                Intercompany                                   TDS

                                             Cellular                                Telecom                       & Other                   Eliminations                              Consolidated
                                             --------                                -------                       -------                   ------------                              ------------

    Cash and cash equivalents                                              $419,696                                        $87,459                                           $259,545                         $                           ?                                          $766,700

    Affiliated cash investments                                                   ?                                        374,137                                                  ?                                              (374,137)                                                ?

    Short-term investments                                                  110,585                                              ?                                             15,010                                                     ?                                           125,595
                                                                            -------                                            ---                                             ------                                                   ---                                           -------

                                              $530,281                                          $461,596                                         $274,555                                             $(374,137)                                        $892,295
                                              ========                                          ========                                         ========                                             =========                                         ========

    Licenses, goodwill and other
     intangible assets                                                   $1,892,755                                       $580,138                                          $(125,953)                        $                           ?                                        $2,346,940

    Investment in unconsolidated entities                                   165,529                                          3,814                                             38,634                                                (6,806)                                          201,171

    Long-term and other investments                                          40,142                                            778                                                  ?                                                     ?                                            40,920
                                                                             ------                                            ---                                                ---                                                   ---                                            ------

                                                                         $2,098,426                                       $584,730                                           $(87,319)                                              $(6,806)                                       $2,589,031
                                                                         ==========                                       ========                                           ========                                               =======                                        ==========

    Property, plant and equipment, net                                   $2,948,508                                       $918,861                                            $39,226                         $                           ?                                        $3,906,595
                                                                         ==========                                       ========                                            =======                       ===                         ===                                        ==========

    Long-term debt:

                         Current
                         portion                                                $93                                            $83                                             $1,142                         $                           ?                                            $1,318

                         Non-
                         current
                         portion                                            878,975                                            737                                            841,626                                                     ?                                         1,721,338

                        Total                                              $879,068                                           $820                                           $842,768                         $                           ?                                        $1,722,656
                                                                           ========                                           ====                                           ========                       ===                         ===                                        ==========

    Preferred shares                                 $                            ?                    $                         ?                                               $825                         $                           ?                                              $825
                                                   ===                          ===                  ===                       ===                                               ====                       ===                         ===                                              ====
                                          Telephone and Data Systems, Inc.

                               Schedule of Cash and Cash Equivalents and Investments

                                         (Unaudited, dollars in thousands)

           The following table presents TDS' cash and cash equivalents and investments at March 31, 2013
                                               and December 31, 2012.

                                                                      March 31,             December 31,

                                                                           2013                     2012
                                                                           ----                     ----

    Cash and cash
     equivalents                                                                  $766,700               $740,481
                                                                                  --------               --------

    Amounts included in short-term
     investments (1) (2)

                                    Government-backed securities (3)               125,595                115,700

                                    Certificates of deposit                              ?                      ?

                                                                                  $125,595               $115,700
                                                                                  --------               --------

    Amounts included in long-term
     investments (1) (4)

                                    Government-backed securities (3)                40,142                 50,305

    Total cash and cash
     equivalents and
     investments                                                                  $932,437               $906,486
                                                                                  ========               ========

             (1)   Designated as held-to-maturity
                   investments and are recorded at
                   amortized cost in the
                   Consolidated Balance Sheet.

             (2)   Maturities are less than twelve
                   months from the respective
                   balance sheet dates.

             (3)   Includes U.S treasury securities
                   and corporate notes guaranteed
                   under the Federal Deposit
                   Insurance Corporation's
                   Temporary Liquidity Guarantee
                   Program.

             (4)   Maturities are 20 months from the
                   balance sheet date.

                                                            Telephone and Data Systems, Inc.

                                                          Consolidated Statement of Cash Flows

                                                              Three Months Ended March 31,

                                                           (Unaudited, dollars in thousands)

                                                                                                         2013                 2012
                                                                                                         ----                 ----

    Cash flows from operating activities

                                          Net income                                                  $6,989                          $67,566

                                           Add (deduct)
                                           adjustments to
                                           reconcile net income
                                           to net cash flows

                                            from operating
                                             activities

                                                             Depreciation, amortization and
                                                             accretion                                            242,077                          197,434

                                                            Bad debts expense                                      17,874                           15,105

                                                            Stock-based compensation expense                        7,585                           10,330

                                                            Deferred income taxes, net                              3,009                            6,187

                                                             Equity in earnings of unconsolidated
                                                             entities                                             (27,089)                         (23,389)

                                                             Distributions from unconsolidated
                                                             entities                                               8,089                            2,938

                                                            Loss on asset disposals, net                            5,616                            2,079

                                                             (Gain) loss on sale of business and
                                                             other exit costs, net                                  6,931                           (4,174)

                                                            Noncash interest expense                                  497                              862

                                                            Other operating activities                                256                              852

                                           Changes in assets and
                                           liabilities from
                                           operations

                                                            Accounts receivable                                    34,038                           38,941

                                                            Inventory                                              16,860                           (4,842)

                                                            Accounts payable                                       (3,203)                         (25,372)

                                                             Customer deposits and deferred
                                                             revenues                                               7,904                           10,745

                                                            Accrued taxes                                           5,309                           82,014

                                                            Accrued interest                                        9,279                            9,117

                                                            Other assets and liabilities                          (95,669)                        (104,148)
                                                                                                                  -------                         --------

                                                                                                                  246,352                          282,245
                                                                                                                  -------                          -------

    Cash flows from investing activities

                                           Cash used for additions
                                           to property, plant and
                                           equipment                                                (176,318)                        (242,611)

                                           Cash paid for
                                           acquisitions and
                                           licenses                                                  (14,150)                         (11,096)

                                           Cash received from
                                           divestitures                                                               -                           50,036

                                           Cash paid for
                                           investments                                                                -                          (10,000)

                                           Cash received for
                                           investments                                                                -                           20,249

                                           Other investing
                                           activities                                                  6,364                             (436)

                                                                                                                 (184,104)                        (193,858)
                                                                                                                 --------                         --------

    Cash flows from financing activities

                                           Repayment of long-term
                                           debt                                                         (328)                            (493)

                                           Issuance of long-term
                                           debt                                                                       -                              358

                                           TDS Common Shares and
                                           Special Common Shares
                                           reissued for benefit
                                           plans, net of tax
                                           payments                                                      140                              (33)

                                           U.S. Cellular Common
                                           Shares reissued for
                                           benefit plans, net of
                                           tax payments                                                  123                              357

                                           Repurchase of U.S.
                                           Cellular Common Shares                                            (18,425)                                          -

                                          Dividends paid                                             (13,792)                         (13,301)

                                           Distributions to
                                           noncontrolling
                                           interests                                                  (2,396)                            (218)

                                           Other financing
                                           activities                                                 (1,351)                             798

                                                                                                                  (36,029)                         (12,532)
                                                                                                                  -------                          -------

    Net increase in cash and cash equivalents                                                                      26,219                           75,855

    Cash and cash equivalents

                                          Beginning of period                                            740,481                          563,275

                                          End of period                                             $766,700                         $639,130
                                                                                              ===

                                                                                                                    TDS Telecom Highlights

                                                                                                                 Three Months Ended March 31,

                                                                                                              (Unaudited, dollars in thousands)

                                                                                                                                                                            Increase (Decrease)
                                                                                                                                                                            ------------------

                                                                        2013                                    2012                          Amount                               Percent
                                                                        ----                                    ----                          ------                               -------

    Local Telephone Operations

                           Operating
                           revenues

                          Residential                                $69,386                                               $69,399                                                         $(13)                                   -

                          Commercial                                  24,284                                                24,130                                                          154                                    1%

                          Wholesale                                   47,850                                                51,536                                                       (3,686)                                 (7%)
                                                                      ------                                                ------                                                       ------

                                                                                                 141,520                                               145,065                                                    (3,545)                                  (2%)
                                                                                                 -------                                               -------                                                    ------

                           Operating
                           expenses

                           Cost of
                           services and
                           products                                   47,595                                                49,168                                                       (1,573)                                 (3%)

                           Selling,
                           general and
                           administrative
                           expenses                                   41,839                                                41,514                                                          325                                    1%

                           Depreciation,
                           amortization
                           and accretion                              38,576                                                37,778                                                          798                                    2%

                           Loss on asset
                           disposals
                           and
                           exchanges,
                           net                                           122                                                    66                                                           56                                   85%
                                                                         ---                                                   ---                                                          ---

                                                                                                 128,132                                               128,526                                                      (394)                                    -
                                                                                                 -------                                               -------                                                      ----

                          Operating income                           $13,388                                               $16,539                                                      $(3,151)                                (19%)
                          ------------

    Competitive Local Exchange Carrier Operations

                           Operating
                           revenues

                          Residential                                 $3,618                                                $4,788                                                      $(1,170)                                (24%)

                          Commercial                                  35,108                                                34,341                                                          767                                    2%

                          Wholesale                                    3,828                                                 4,915                                                       (1,087)                                (22%)
                                                                       -----                                                 -----                                                       ------

                                                                                                  42,554                                                44,044                                                    (1,490)                                  (3%)
                                                                                                  ------                                                ------                                                    ------

                           Operating
                           expenses

                           Cost of
                           services and
                           products                                   21,962                                                22,564                                                         (602)                                 (3%)

                           Selling,
                           general and
                           administrative
                           expenses                                   15,932                                                16,260                                                         (328)                                 (2%)

                           Depreciation,
                           amortization
                           and accretion                               5,447                                                 5,489                                                          (42)                                 (1%)

                           Loss on asset
                           disposals
                           and
                           exchanges,
                           net                                            41                                                    53                                                          (12)                                (23%)
                                                                         ---                                                   ---                                                          ---

                                                                                                  43,382                                                44,366                                                      (984)                                  (2%)
                                                                                                  ------                                                ------                                                      ----

                          Operating loss                               $(828)                                                $(322)                                                       $(506)                             >(100)%
                          ------------

    Hosted and Managed Services Operations

                          Revenues                                   $35,564                                               $17,558                                                      $18,006                                >100%
                                                                     -------                                               -------                                                      -------

                           Operating
                           expenses

                           Cost of
                           services and
                           products                                   24,814                                                 9,774                                                       15,040                                >100%

                           Selling,
                           general and
                           administrative
                           expenses                                    9,921                                                 6,732                                                        3,189                                   47%

                           Depreciation,
                           amortization
                           and accretion                               5,468                                                 4,176                                                        1,292                                   31%

                           Loss on asset
                           disposals
                           and
                           exchanges,
                           net                                            30                                                     1                                                           29                                >100%
                                                                         ---                                                   ---                                                          ---

                                                                                                  40,233                                                20,683                                                    19,550                                    95%
                                                                                                  ------                                                ------                                                    ------

                          Operating loss                             $(4,669)                                              $(3,125)                                                     $(1,544)                                (49%)
                          ------------

    Intercompany revenues                                                                        $(2,577)                                              $(2,592)                                                      $15                                     1%

    Intercompany expenses                                                                         (2,577)                                               (2,592)                                                       15                                     1%
                                                                                                  ------                                                ------                                                       ---

    Total TDS Telecom operating income                                                            $7,891                                               $13,092                                                   $(5,201)                                 (40%)
                                                                                                  ======                                               =======                                                   =======

                                                    Telephone and Data Systems, Inc.

                                                 Financial Measures and Reconciliations

                                                    (Unaudited, dollars in thousands)

                                                      TDS Consolidated
                                                      ----------------

    Three Months Ended March 31,                                  2013                            2012
    ----------------------------                                  ----                            ----

                     Cash flows
                     from
                     operating
                     activities                                                       $246,352                                   $282,245

                    Deduct:

                     Cash used
                     for
                     additions
                     to
                     property,
                     plant, and
                     equipment                                                         176,318                                    242,611

                    Free cash flow (1)                                                 $70,034                                    $39,634
                                                                                       =======                                    =======

             (1)   Free cash flow is defined as Cash
                   flows from operating activities
                   less Cash used for additions to
                   property, plant and equipment.
                   Free cash flow is a non-GAAP
                   financial measure.  TDS believes
                   that free cash flow as reported
                   by TDS is useful to investors and
                   other users of its financial
                   information in evaluating the
                   amount of cash generated by
                   business operations, after
                   consideration of capital
                   expenditures.

SOURCE Telephone and Data Systems, Inc.


Source: PR Newswire