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Telephone and Data Systems, Inc. (TDS)
Q4 2018 Earnings Conference Call
February 22, 2019 10:30 AM ET
Jane McCahon - Senior Vice President, Corporate Relations & Corporate Secretary
Ken Meyers - President & Chief Executive Officer, U.S. Cellular
Steve Campbell - Executive Vice President & Chief Financial Officer, U.S. Cellular
Mike Irizarry - Executive Vice President & Chief Technology Officer, U.S. Cellular
Vicki Villacrez - Senior Vice President, Finance & Chief Financial Officer
Conference Call Participants
Reed Kern - JP Morgan
Ric Prentiss - Raymond James.
Simon Flannery - Morgan Stanley
Zack Silver - B. Riley
Sergey Dluzhevskiy - GAMCO Investors
Michael Rollins - Citi
Previous Statements by TDS
» Telephone and Data Systems, Inc. (TDS) CEO Ken Meyers on Q3 2018Results - Earnings Call Transcript
» Telephone & Data Systems, Inc. (TDS) on Q2 2018 Results - Earnings Call Transcript
» Telephone and Data Systems' (TDS) Management on Q1 2018 Results - Earnings Call Transcript
And with that I would now like to turn the call over to Jane McCahon. Please go ahead.
Thank you, Julie and good morning everyone and thanks for joining us. I want to make you all aware of the presentation we have prepared to accompany our comments this morning which you can find on the Investor Relations' sections of the TDS and U.S. Cellular websites.
With me today and offering prepared comments are from U.S. Cellular, Ken Meyers, President and Chief Executive Officer; Steve Campbell, Executive Vice President and Chief Financial Officer; Mike Irizarry, Executive Vice President and Chief Technology Officer. From TDS Telecom is Vicki Villacrez, Senior Vice President of Finance and Chief Financial Officer.
This call is being simultaneously webcast on the TDS and U.S. Cellular Investor Relations' websites. Please see the websites for slides referred to on this call including non-GAAP reconciliations. We provide guidance for both adjusted operating income before depreciation and amortization or OIBDA and adjusted earnings before interest taxes depreciation and amortization or EBITDA to highlight the contributions of U.S. Cellular's wireless partnerships.
As shown on Slide 2, the information set forth in the presentation and discussed during this call contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Please review the Safe Harbor paragraph in our press releases and the extended version in our SEC filings.
Shortly after we released our earnings and before the call, TDS and U.S. Cellular filed their SEC Forms 8-K including today's press releases and in addition the SEC Forms 10-K have been filed.
In terms of our upcoming IR conference schedule Slide 3, we'll be attending the Raymond James Institutional Investors Conference on March 5th in Orlando. And I'm doing a non-deal roadshow with B. Riley FBR in Los Angeles and San Francisco on March 27th and March 28th.
Turning to Slide 4, it's been a while since we updated our progress against our goal that we articulated back in 2013 which says we intend to invest heavily in our businesses to improve their overall competitiveness and sustainability, while at the same time providing a return to our shareholders.
The ratio we stated called for TDS to return $1 to shareholders for every $3 invested back in the business at the TDS level. Given that we have not made any significant cable acquisitions for a number of years, you can see that our returns to shareholders have exceeded that planned ratio. And to that end this morning, we announced that we yet again raised our dividend for the 45th consecutive year.
On the accounting side of the house, we adopted ASC 842 for leases on January 1, 2019. We will gross up the balance sheet by about $1 billion and are not expecting any impact to the income statement from its adoption.
Before I turn the call over, I want to remind everyone that even though FCC Auction 101 has ended, we are unable to respond to any questions related to any FCC auctions until the end of Auction 102.
And now I'll turn the call over to Ken Meyers. Ken?
Thanks, Jane. Good morning. I appreciate everyone spending a bit of time with us today. My remarks this morning will primarily focus on our annual results, highlighting our key achievements in 2018. Steve will then cover fourth quarter operating and financial results. I will then turn to our strategic priorities for this year and Mike Irizarry will discuss our 5G plans. We'll finish with Steve discussing guidance for 2019.
That said, I can't, but help myself from highlighting the successes in the fourth quarter. We reported 20,000 new handset connections, along with a 2% increase in operating revenues and a 12% increase in adjusted operating income before depreciation and amortization. Even with all the fourth quarter promotional spending, it was a really good quarter and a great launching point for 2019.
Looking back at the full year, we made significant progress on our goals slide six. As I've been saying all year, the shift in the bases from competition away from service pricing to device promotion has been a healthy one for the industry and one that's necessary as we look to provide the added capacity into our networks to satisfy the growth in data usage bossed by unlimited plans and to fund upcoming investments in 5G.
To start, we accomplished our top priority which was to correct, protect and grow our customer base. Postpaid handset churn remained low, indicating exceptional levels of customer loyalty and effective promotions helped grow our handset base. Much of our success is due to the introduction of our Total Plans which included unlimited options. Customers love the simplicity of that offering.