Greetings and welcome to the TDS and US Cellular second quarter operating results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jane McCahon, Vice President Corporate Relations for TDS. Thank you, Ms. McCahon. You may begin.

Thank you, [Rob]. Good morning and thank you for joining us today. I want to make sure you are all aware of the two presentations we have prepared to accompany our comments this morning, one for the share combination proposal and the second one for second quarter earnings, which you will find on the investor relations pages of the TDS and US Cellular website. With me today and offering prepared comments from TDS, Ken R. Meyers, Executive Vice President and CFO; from US Cellular, Mary Dillon, President and Chief Executive Officer; Steve Campbell, Executive Vice President Finance and CFO; and from TDS Telecomm, Vicki Villacrez, Vice President Finance and CFO. This call is being simultaneously webcast on the investor relations sections of both the TDS and US Cellular websites. Please see the websites for slides referred to on this call including non-GAAP reconciliations. Shortly after we issued our press releases this morning and before this call, TDS and US Cellular filed SEC Form 8-K current reports, including the press releases we issued this morning. Both companies plan to file their SEC Form 10-Qs later today. TDS also filed an 8-K including the press release on the share combination proposal and expects to file the preliminary proxy materials today. In connection with our proposal this morning, management is reaching out to meet with our shareholders to explain the details and rationale and answer any questions you may have. We look forward to meeting with you in the near future. As always, we have an open-door policy, so if you are in Chicago or would like to meet with members of management from the TDS corporate, US Cellular or TDS Telecomm, the investor relations team will try to accommodate you, calendars permitting. On Slide 2, the information set forth in these presentations today contains statements about expected future results and financial results that are forward-looking and subject to risks and uncertainties. Please review the Safe Harbor paragraphs in our releases and the more extended versions that will be included in our SEC filings. On Slide 3, additionally this presentation is not a solicitation of a proxy from any TDS shareholder. Additional information relating to the proposals to be submitted to the TDS shareholders and participations in the solicitation are included in TDS' preliminary proxy statement and will be included in TDS' definitive proxy statement when it becomes available. Investors and security holders are advised to read such documents when they become available because they will contain important information. Shareholders and other investors may access such documents without charge when they become available on the SEC website and on the TDS website in the investor relations section on the SEC filing page. In addition, shareholders may obtain a free copy of the definitive proxy statement when it is available by contacting [McKenzie Partners] at 800-322-2888. With that, I'll turn the call over to Ken Meyers.

Thank you, Jane, and good morning. Jus tot be clear, I'm going to start with a few comments on the share consolidation amendment before talking about the quarter. So since there are two presentations, I'm going to start on the presentation that's labeled Share Consolidation Amendment on Slide 4. As we have discussed on prior calls, our special common shares have presented challenges to the company. First, the special common shares have traded at a substantial discount to the common shares in large part, we believe, due to their limited liquidity. As a result, we have not had an equity security that we could issue without causing extra dilution. The multiple classes of stock have also added complexity and confusion to the capital structure. Finally, having two publicly traded securities has diluted our trading volume, resulting in limited liquidity and discounts in both securities. On Slide 5, we have been looking for a solution to address these challenges presented by the special common shares for some time now believing that while there are many strategic initiatives we need to address this is an important first step. This morning we announced a proposed plan that we believe provides a clear solution. Our proposed solution eliminates the discount, preserves our ability to issue shares in the future and retains the relative voting power in place today. Specifically, our proposal entails three amendments: first, a share consolidation amendments; second, a vote amendments; and lastly, an ancillary amendment, which essentially amends and cleans up various obsolete and inoperative provisions. Let me walk through those for you. Turning to Slide 6, I want to review our rationale and explain why we believe a consolidation should be accretive to both classes. First, the combination could increase liquidity in the post transaction common shares and potentially improve…

Great, thank you, Ken, and good morning, everyone. I'm going to begin our prepared comments with an overview of the quarter and Steve will follow with a review of our financial and operating results for the second quarter. Our performance for the quarter was mixed. We grew postpaid ARPU for the fifth consecutive quarter, maintained low postpaid churn and increased service revenue and profitability. However, our gross additions and overall subscriber results were disappointing and I'll talk more about that in a minute. We're pleased with the increases in revenues and profitability that we're reporting this quarter. Admittedly, some of the profitability improvement was due to lower gross ads, which reduced our sales and marketing expenses but also reflects higher ARPU and increased inbound roaming revenues as well as actions to manage costs. Digging a little deeper into the performance highlights for the quarter, smartphone data plan penetration helped to increase postpaid ARPU and as more customers migrate to our belief plans they are choosing more data packages, which leads to higher ARPU. Our postpaid churn of 1.4% was a slight year-over-year improvement and on par with the first quarter. We're preparing for the first wave of our 4G LTE launch. Our network development is on track and we're working with our OEM partners on completion of our launch devices. Now I'll discuss our customer results in more detail. This is an area of continued challenge and focus for US Cellular. In both the postpaid and prepaid segment our competitors continue to aggressively price and promote handsets to win new customers. Also, there has been significant changes in pricing strategies recently with further adoption of [pure] pricing for data, a shift we applaud, but also further plan price reductions in both segments that increase the pricing pressure in the marketplace.…

Thank you, Mary, and good morning, everyone. US Cellular's results reflect the continuing challenges of an extremely competitive market and a sluggish economy in which carriers continue to fight for a dwindling pool of new subscribers and the cost of acquiring switchers are significant. As you can see on Slide 7, retail gross additions were 226,000, down from 307,000 in the prior year quarter. In the postpaid segment, there was a net loss of 41,000 customers as the decline in retail gross additions was partially offset by a slight improvement in churn. In the prepaid segment, we had a loss of 17,000 customers, so in total we lost 58,000 retail customers in the second quarter this year compared to net additions of 7000 last year. Slide 8, as shown here, postpaid churn improved to 1.38% from 1.43% last year. We continue to see benefits as more customers sign up for belief plans and begin to enjoy the exceptional value and service we provide. The increasing level of family plans is also contributing to this improvement in churn. Our smartphone sales and penetration continue to grow, as you can see on Slide 9. During the second quarter we sold 308,000 smartphones, which represented 40% total devices sold. This compares to the second quarter of 2010 when we sold about 136,000 smartphones or about 16% of the total units sold. Smartphones now represent almost 23% of our postpaid subscriber base compared to only 10% at the end of the second quarter of 2010. While the cost to subsidize these devices is greater, we expect average revenue per customer will continue to benefit over time from the inclusion of these devices in our subscriber base. Turning to the P&L, as you can see on Slide 10, service revenues for the quarter were just…

Thank you, Steve. Good morning, everyone. I'm pleased to report TDS Telecomm's second quarter performance was highlighted by: one, continued growth in ILEC data revenues, including the affects of hosted and managed service acquisitions; two, ongoing initiatives to stabilize revenues and line losses; and three, continued cost control efforts. As you can see on Slide 17, for the quarter, Telecomm's combined ILEC and CLEC revenues were essentially the same as last year's second quarter. ILEC revenues grew 1.1% with growth in high speed data and our HMS acquisitions more than offsetting declines in voice and network access revenues. CLEC revenues declined 3.7% reflecting our plans to limit investment in new residential customers as commercial revenues stayed flat. Turning to Slide 18, ILEC data revenues increased 16% in the second quarter driven by high speed data subscriber additions and also by our acquisitions of [Visientine], which provide hosted and managed services. High speed data subscribers grew 6% year-on-year. We continue to attract healthy levels of new customers and they are taking higher speed. Over 80% of our data subscribers are taking speeds of three megabits or greater and 16% are taking greater than 10 megabit speeds. Our high speed data penetration over access lines has increased to 47%, up five percentage points from last year. In a similar manner, our residential DSL penetration has advanced to 60% of primary residential lines. Residential DSL ARPU remains stable at nearly $37 as migration to higher speed service offsets competitive pricing pressures. The decline in ILEC voice revenues was driven by the continued trend in physical access line loss as you can see on Slide 19. Line loss was 5.5%. Our star voice packages continue to help us mitigate line loss. At June, we had 191,500 customers on these plans, which are 52% of…

Thank you. Operator, we'd now like to open up the call for questions and I'd like to note that also available to questions on the call today is Alan Ferber from US Cellular, Executive Vice President, Chief Strategy and Brand Officer; and Bill Megan, the president of our HMS operations. Operator?

(Operator Instructions). Your first question comes from the line of Phil Cusick - JPMorgan Chase.

Can you give us a little more color on the potential impact of the recently proposed US [inaudible] reform long term?

I'll make a couple of comments. This is Mary and Ken will add. We're actively working on that topic in terms of our response to that and we are at this point, and frankly with the current direction of that -- because it doesn't really reflect the national broadband plan direction and even consumer movement towards wireless. So it's something that we feel that there is probably a better plan that can be put in place and we'll be working with our regulatory team to propose an alternate solution to that.

I would agree. What we have is a proposal that's out there. There is a process where there will be a lot of advocacy going on and it's impossible to know what the impact is of something and, quite frankly, it's uncertain at this point.

On the wireless side, postpaid ARPU was up and it seemed like it [inaudible] in the quarter. How much of that came from the smartphone side versus maybe the increase in feature phone data and could we see that kind of growth in ARPU sequentially going forward?

I think it's hard to actually say how much is smartphone versus feature phone data but we are, as we said in the prepared comments, we are seeing increased penetration of smartphones, nice growth there. We are definitely seeing uptick of data on feature phones and data revenue is a big driver for the growth that we've seen in ARPU and we'd expect to see continuing growth in ARPU over time both due to the data option but as customers move to our belief plans which have bundled data and offer nice value to customers.

Your next question comes from the line of [inaudible]. [Unknown]: So there isn't necessarily a timeline of -- you provided a timeline but there isn't a timeframe of when you expect reclassification to occur. Is it essentially the fourth quarter?

There isn't a timeline now because the process starts today with the filing of the preliminary proxy statement. The SEC now weighs in and decides whether they're going to review it and how long that process will take. Generally speaking, that could be the next eight weeks. After that we'll issue a final proxy and 30 days after the final proxy gets issued is when you would see a shareholder meeting. So from where we sit today it is probably fourth quarter but there is a lot of uncertainty. It starts today when you file with the SEC. [Unknown]: Now you mentioned in the presentation this reclassification allows you to pursue strategic initiatives or other strategic initiatives. Can you talk about the consolidation in the industry that's still occurring, obviously with T-Mobile, AT&T and how you guys envision US fitting in that role or what the future of USM is in participating with the consolidation? The second part of that is there is I think 17%, 18% minority interest, so does this reclassification allow you to roll that minority interest that you currently don't own? Does one thing have to do with another in light of everything that's going on, including the consolidation that's occurring in the industry?

A lot of different pieces to that one; let's see if I can hit -- . [Unknown]: Thank you.

Start with our strategy at US Cellular is to differentiate our services around what we deliver the customer. We think we can do that in the areas that we operate today. We are always looking for new opportunities to expand into adjacencies from where we're at but not go to other corners of the country where we can't leverage our network and brand presence. That's our core M&A strategy at US Cellular. We continue to look at different transactions as they're presented and to the extent that opportunities present themselves out of a possible T-Mobile, AT&T acquisition, I would expect we would look at those like we have ever other one in the past. With respect to the roll up, in 2007 we stated that we were no longer pursuing the buy-in of the US Cellular minority interest through the disparity and valuations that existed between TDS special common and the US Cellular shares and clearly the discount in the TDS common contributes to that. But it's important to note that that filing remains in effect today and there have been no changes in that regard.

Your next question comes from the line of Ric Prentiss - Raymond James.

Smartphones, you guys talked about the success you've had rolling them out. One of the questions we've been asking a lot of the carriers this quarter is the thesis that a lot of people have looked at is that smartphones should lead to higher ARPU. You've seen some of that. It should lead to lower churn, a little bit of that. But when you look at the formula, what you have to pay to subsidize for a smartphone and the data usage on the network from a CapEx and OpEx standpoint, do you feel comfortable that deploying smartphones does lead to higher ARPU, lower churn and eventually it does produce that return on invested capital that you're trying to achieve?

We do. Obviously the economics of smartphone customers are changing, both on the revenue side and on the cost side. On the cost side, one of our strategies is to ensure that we have a very diverse portfolio of smartphones and so the cost of our smartphones on a blended basis are coming down. We expect by the end of this year, for example, to have around four sub-$200 cost smartphones. So when you blend that across our overall portfolio it impacts the cost side of it. At the same time, we have also talked about things like tier data pricing on a going forward basis. We do believe that has at least two major benefits. The first is to align data revenue with data cost better and the second is to, in combination with the lower cost smartphones, enable more customers to get into a smartphone. We expect to introduce tier data pricing sometime over the next two to three quarters and the combination of all of that will increase smartphone penetration as well as revenue and better cost controls. At the same time, our move to LTE will also lower our data usage cost as well. In the short term that'll have an impact on high-end device cost. But over the long turn it'll certainly make the economics much more attractive.

That leads to the second question I had is on the 4G LTE you guys are rolling it out in the region. Is it important to have roaming partners for 4G outside of your market and, if so, how do you compare the different options that are starting to come up when you look at what frequencies are being offered, what timeframe as far as devices becoming available, just how you think through? Obviously last week another long-time industry veteran, [John Stan], announced they were going to introduce a roaming concept contingent on funding. But as you look at 4G out of region, how important and how do you consider the options that are out there?

Certainly in the long run having LTE roaming will be important for the overall experience of our users. I think in the short run we're not sure that's as critical given that the content and the applications that leverage 4G are somewhat immature still. That being said, I think our roaming partners in LTE will become much more diverse and we are pursuing all those active discussions as we see.

(Operator Instructions). Your next question comes from the line of [James Mormon] - Standard & Poor's. [James Mormon]: First of all, with what's going on with your net additions, are you seeing any impact at all from the potential T-Mobile acquisition in terms of -- one normally would think that that would be a great area for you to put subscribers but is it being offset from competition you're seeing by other prepaid carriers? Secondly, could you also just talk about what you're seeing on the tablet front? I know you're rolling out more tablets. Are you seeing any significant contribution to data revenue yet from that source?

First of all, on the net additions, I want to reiterate that our churn is basically flat to slightly better than it's been. So we feel that we're holding our own as it relates to retaining our customers and there's a highly competitive battle for gross adds and we want to get more of those and we're focused on improving our net adds. But we feel good about the churn impact and the churn results that we have. T-Mobile, our heaviest -- we don't overlap with them deeply in every market that we operate in. We're certainly paying close attention to those customers in the markets that we do compete with T-Mobile and they're interested to look for another carrier. So in general what we're doing is really just continuing to play our offense, which is to really be this differentiated carrier that we are, making sure that people are aware of our great network, our great customer service and our increasingly competitive lineup of handsets to compete against all carriers. Oh, tablets.

Yes, in terms of those, we are seeing nice growth in tablets. We are selling two right now. We have third launching later this year. In terms of data revenue contribution, it's still pretty small.

Your next question comes from the line of Kevin Roe - Roe Equity Research.

First on roaming, you mentioned it's coming from data. Can you talk about the carriers that are driving that big increase year-over-year? I guess the first half was 20% plus in Q1, 30% plus in Q2. Is this the type of year-over-year growth we should expect for the second half? [Steve Campbell]: Well, I don't think it's a big secret that our major roaming partners are Verizon and Sprint and so you can infer from that that that's where the increase in volume is coming from. You'll recall that we discussed in previous calls going back say maybe four to six quarters ago that we'd actually seen a dip in roaming revenue as a result of Verizon's acquisition of Altel and moving some of that on network. What we're starting to see is the reversal of that as usage, especially data usage, continues to grow. I think when you look out to the back half of the year, I think we still expect to see nice year-over-year growth in overall roaming revenues, again driven principally by data.

Would you say decelerating or accelerating or unclear at this point? [Steve Campbell]: I wouldn't given that it's not something that's in our control. I think we -- again, I think we expect year-over-year but I wouldn't hazard a guess on whether it's accelerating or decelerating over the next quarter or two.

Ken, on the US Cellular balance sheet, over half a billion of cash the first half of this year, that's materially higher than the cash balance has been in US Cellular's history. Is this dry powder for, as you mentioned earlier, the possibility of looking at divestitures from T-Mo if that happens or if the SEC gets their act together and we eventually have some spectrum to bid on? What's the thinking there?

We had been -- shepherding I guess is a good word -- with the expectation of some activity around spectrum. We also, besides the AT&T, T-Mobile possibilities, there is also the company's initiative around LTE. Those three things, combined with the rather volatile markets of the last year have resulted in us being rather cautious with that cash balance right now.

So if the spectrum issue drags on for potentially another couple years or longer, I guess it's fair to say that you would maintain that stance of conservative cash balance.

I can't possibly look out that many years with the cash balance. I think it's something we look at every year based on what we see coming down the road and the various alternatives that we have. I won't say that we won't do anything for three or four years if we live in that much uncertainty around spectrum.

But right now you're comfortable with the cash balance where it's at.

Yes, we are.

Your next question comes from the line of [Adrian Mill] - Eagle Capital. [Adrial Mill]: I know you guys did a lot of work a couple years ago on whether our regional cellular company could still be relevant and looked at ways in other industries and had some good data from it. I'm just curious if after the past couple quarters of results where we've now seen everybody lose share to AT&T and Verizon if that was something you thought might happen in short term or if it's been surprising? If it's been surprising, how long would you guys potentially consider losing subs before you do a strategic transaction or consider a sale?

I would say certainly it's not something that we want to continue to do in terms of our subscriber trends. We're very focused on competing. We've got lots of assets as it relates to being the top carrier as it relates to customer satisfaction, network quality, customer service and we believe that those benefits and assets of our brand and our company are still to be discovered by more people. So we have a couple of customer segments in which we operate very strongly and we believe we can grow in those segments well. Once we have customers in our -- once we're in the consideration set of people that are converting or changing wireless carriers, we have a very strong, the strongest, conversion rate from consideration to customer. So we believe that in the footprint we're in we still have growth that we can achieve and that's really what we're focused on. [Adrial Mill]: I guess the question is more that, yes, I think in response, if there were anybody who had a chance of gaining share it should be you guys, right, because you have such a strong brand and you've done such a good network build out on your towers. So is there a point in time -- how are you evaluating the trends? There have been a lot of people who have made the case that this could become a long-term duopoly and pretty much around the world we've given spectrum in national advertising. Is that -- is it still your contention that it is a good regional business?

The answer is yes we still think it is. I think there is a lot of things that have gone on over the last 12 to 18 months around handset exclusivity, around technology changes that are going on right now and, quite frankly, the economy that it created a unique set of factors that the company is working through and we'll evaluate where we stand another 12 months down the road as we do every year, see how all of those factors are playing out. But right now, clearly, a year ago we looked at handset exclusivity. I think we were in a more challenged position than we are today having rolled out Android rather successfully has helped balance it a little bit. But that' clearly one of the issues that is in front of the FCC right now as they consider the consolidation that is going on in this industry.

Your next question comes from the line of Brian Furbush - Churchill Capital.

This one has to do with the reclassification. Will you need any sort of tax ruling from the IRS or other councils before completing it?

In fact, we have an opinion already on the tax side that says it would not change the tax basis of any of the shareholders, wouldn't change their holding period. That's tax free to the company.

Your next question comes from the line of Ric Prentiss - Raymond James.

I have a follow-up on the handset issue, Ken. Clearly the iPhones, electronic device, Android has helped amuse that a little bit. As you look out there, is there a timeframe where the regionals can get at an iPhone? When do you think that might occur just hypothetically? I don't want to put anybody in a box but do you think the day will come when iPhones will come out some way other than Verizon and T?

The answer is I don't know. Interestingly, I think it really plays back a little bit to the earlier question about how does this whole thing work when you've got high subsidies and you've got a new network cost? Right now some of the things that are exciting to me is to see what's happening with the Android phone cost that will allow carriers to start to recapture some of the economics needed to support that LTE investment and the subsidation of those smartphones, whereas that works on a $200 smartphone but if I’m subsidizing $400 or $500 suddenly most of that revenue isn't going to pay for the network. So I don't know if we get it and if we do I'm sure it brings a heck of a lot of challenges with it.

Related question, could you mention what percent of your base upgraded in the quarter?

Yes, it was about 9.5%.

Final question, back to that formula, the smartphones lead to better return on capital, what would be something that would get you concerned? Obviously it sounds like handset subject would be one of them. What else would get you concerned on is that formula, smartphones leads to the right return on capital, what would get you concerned it wasn't working?

Let me just add something which is that I think it's a concern but something that we're looking to manage, which would be getting paid for the data usage and as Alan said, we're actively working on our version of making sure that we've got the right balance of customer benefit and economics.

There are no further questions at this time. I would like to turn the floor back to management for closing comments.

I'd like to thank you all for joining us on what I’m sure will be a very busy morning and we look forward to circling around and meeting with many of you over the next week or two. Thanks.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.