Telephone and Data Systems, Inc. TDS posted strong fourth-quarter 2024 results, with both top and bottom lines beating the respective Zacks Consensus Estimates. TDS reported a revenue decline year over year, owing to demand softness in the U.S. Cellular vertical.

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However, solid growth in residential broadband connections partially cushioned the top line. TDS Telecom deployed 129,000 marketable fiber addresses in 2024. Management’s focus on cost optimization is driving profitability.

Net Income of TDS

On a GAAP basis, the company reported a net loss of $11 million or 10 cents per share compared with a net loss of $523 million or $4.64 in the year-earlier quarter. Despite top-line decline, cost discipline and lower operating expenses in the TDS Telecom segment led to narrower loss during the quarter.

On a non-GAAP basis, the company reported a net loss of $10 million or a loss of 9 cents per share compared with a loss of $12 million or 11 cents in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 23 cents.

In 2024, the company reported a GAAP net loss of $97 million or a loss 85 cents per share compared with a loss of $569 million or $5.06 in 2023. Non-GAAP net loss was $12 million or 11 cents per share compared with a loss of $59 million or 53 cents in 2023.

Revenues of TDS

Net sales in the quarter were $1.24 billion, down from $1.31 billion reported in the year-ago quarter. Declining revenues in the U.S. Cellular segment affected the top line. However, the figure beat the Zacks Consensus Estimate by $14 million.

In 2024, the company generated $4.96 billion in revenues, down from $5.2 billion in 2023.

Revenues from U.S. Cellular were $970 million, down 3% year over year. A reduction in postpaid retail and prepaid connections impeded the top line. However, growth in fixed wireless customers and tower revenues are positive factors. Net sales beat our revenue estimate of $922 million. Total cash expenses were $811 million, marginally down from $812 million in the prior-year quarter.

The company reported an Operating loss of $9 million against an income of $21 million registered in the year-ago quarter. Postpaid average revenues per user (ARPU) rose to $51.73 from $51.61. Postpaid average revenues per account decreased to $131.10 from $131.63 in the year-ago quarter. Prepaid ARPU was $30.59, down from $32.32 in the prior-year quarter.

TDS Telecom contributed $264 million to revenues compared with $261 million reported in the prior-year quarter. The top line fell short of our estimate of $266.9 million. Total residential connections were 935,600, down from 952,900 in the year-earlier quarter. Residential revenues per connection were $64.72, up from $62.74 in the prior-year quarter.

Total cash expenses were $187 million, up 1% year over year. Around 22% of customers opted for 1 Gigabit+ speed compared with the prior-year quarter’s tally of 16%. About 11% of users have chosen 600 Mbps speed compared with 9% in the year-earlier quarter. Its broadband expansion rose to 126,100 from 92,200 a year ago. Total connections were 1,126,100 compared with 1,163,100 in the year-ago quarter.

Other Details of TDS

Total operating expenses were $1.2 billion, down 35% from the prior-year quarter’s levels. The company reported an operating income of $37 million against an operating loss of $524 million.

Adjusted EBITDA in TDS Telecom was $80 million, up 3% year over year. Adjusted EBITDA for U.S. Cellular witnessed a decrease of 11% to $208 million compared with the prior-year quarter’s figure of $233 million.

TDS’ Cash Flow & Liquidity

In 2024, Telephone and Data Systems generated $1.145 billion of net cash from operating activities compared with $1.142 billion in the prior-year quarter. As of Dec. 31, 2024, the company had $364 million in cash and cash equivalents, with $4.05 billion of long-term debt compared with respective tallies of $236 million and $4.08 billion in 2023.

TDS’ Outlook

For 2025, management expects total operating revenues at TDS Telecom in the range of $1.03-$1.07 billion. Adjusted EBITDA is estimated in the band of $320-$360 million. Adjusted OIBDA (non-GAAP) is expected to be $310-$350 million. Capital expenditures are expected in the range of $375-$425 million. Owing to pending transaction with T-Mobile, the company didn’t provide any guidance for U.S. Cellular.

TDS’ Zacks Rank & Other Stocks to Consider

TDS currently sports a Zacks Rank #1 (Strong Buy).

Keysight Technologies, Inc. KEYS has a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications and rising adoption of driver-assistance systems globally.

InterDigital IDCC sports a Zacks Rank #1 at present. In the trailing four quarters, it delivered an earnings surprise of 158.41%.

It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Akamai Technologies, Inc. AKAM carries a Zacks Rank #2 at present. AKAM delivered an earnings surprise of 2.69%, on average, in the trailing four quarters. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Its offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.

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