Greetings and welcome to the TDS and U.S. Cellular Fourth Quarter Operating Results Call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today Jane McCahon, Vice President of Corporate Relations. Thank you, you may begin.

Thank you LaTonya and good morning, everyone, 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 will find on the Investor Relations sections of the TDS and U.S. Cellular website. With me today and offering prepared comments from TDS, Doug Shuma, Senior Vice President and Corporate Controller, from U.S. Cellular both of whom are joining us from the World Mobile Congress in Barcelona, Ken Meyers, President and Chief Executive Officer and Steve Campbell, Executive Vice President and Chief Financial Officer. And from TDS Telecom, Dave Wittwer, President and Chief Executive Officer and Vicki Villacrez, Vice President Finance and Chief Financial Officer. This call is being simultaneously webcast on the Investor Relations sections of the TDS and U.S. Cellular websites. Please see the websites for slides referred to on this call including non-GAAP reconciliations. The information set forth in the presentations 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 paragraphs in our release and the more extended versions in our SEC filings. Shortly, after we release our earnings and before this call, TDS and U.S. Cellular filed SEC Forms 8-K, including today’s press releases and also pro forma showing the impact from our market divestitures and the deconsolidation of our New York 1 and 2 markets. TDS and U.S. Cellular plan to file their SEC Form 10-K over the next few days. On Slide 3 you will see our upcoming conferences including Morgan Stanley in San Francisco next week on March 4 and Deutsche Bank in Palm Beach Florida on March 10. Also keep in mind that TDS has an open door policy, so if you are in the Chicago area and would like to meet with members of management, Investor Relations team will try to accommodate you calendars permitting. As we’ve had in prior years, we take the time on our fourth quarter call for the CEOs of both of our business units, to give you a brief recap of the year just completed, but more importantly to share with you their strategic priorities for the coming year. Before we turn the call over to Ken Meyers, Doug Shuma will spend a few moments on what we are focusing on at the TDS enterprise level. Doug.

Thanks Jane. Turning to Slide 4, our role at TDS is to actively manage the existing portfolio of assets. And you have seen numerous examples of us being more active like this in this endeavor. We continue to work to identify new businesses like cable and HMS, which offer higher returns and growth rates to strengthen our overall financial position. Returning value to shareholders in accordance with our stated capital allocation strategy through either dividends or share repurchases remains a focus. In fact, this morning we declared our March dividend increasing the rate 5.1% over last year. This represents the 40th consecutive year that we have increased our dividend, an achievement accomplished by only a handful of companies. Our share repurchase activities during the fourth quarter was very modest. And although we said we would begin at a moderate rate, we expect amounts to be somewhat higher going forward now that we are out of earning blackout, subject of course to other restrictions. In 2014, we will continue to work on additional strategic initiatives, including, but not limited to the sale of the remaining non-strategic spectrum at U.S. Cellular at favorable valuations and the monetization of non-strategic towers. Going into 2014 TDS has a strong balance sheet, which gives us financial flexibility to fund many of these initiatives. And now I’ll turn the call over to Ken Meyers, Ken.

Thanks Doug. Good afternoon from Barcelona, the site of the 2014 Mobile World Conference. Just me and 80,000 others involved in the wireless industry, including vendors, operators and regulators from around the world. Besides seeing some great new products like the Samsung GS 5, I’ve also learned even more acronyms from my engineering friends during the week. Before I begin my review of 2013 accomplishments, I would like to discuss our decisions as announced in the press release this morning, not to give guidance for revenues and profitability for 2014 at this point. This decision was based on a number of significant factors that have affected our ability to forecast with confidence. Those factors include: one, the unprecedented number of pricing moves that have occurred over just the past several weeks. As you know given our size, U.S. Cellular has mostly been a price taker, and we are in the midst of developing our competitive responses. Looking ahead, we also believe there is a high degree of uncertainty about that pricing environment over the next few quarters. Two, related to this is our plan to introduce device financing in the second quarter. Different provisions in these plans can change the timing of revenue recognition dramatically. Even though the economic impact over the life of the plan is the same. Service plan pricing related to these offerings can also impact revenue recognition. And we are currently in the midst of finalizing our offerings in that area. Three, as we have discussed, we have been and are currently experiencing elevated churn at least in part due to the recent billing system conversion. We have aggressive plans to bring churn down quickly over the next few months, but cannot predict just with accuracy just how quickly we will achieve those results. Those 3…

Thank you, Ken and hello everyone. I’m going to begin with a few comments about U.S. Cellular’s core markets, which for purposes of this discussion exclude the New York 1 and 2 markets that we deconsolidated in April of 2013 and the markets that we divested in May of 2013. As shown on Slide 12, postpaid gross additions were 176,000, a decline of 32,000 or 15% compared to a year-ago. churn for the quarter was 1.91%, up from 1.68% last year resulting in a postpaid net loss of 71,000 customers for the quarter. A number of factors impacted these results. The billing system implementation and subsequent disruption impacted our ability to add customers at times and also caused customers to churn. The other major factor during the quarter was the relatively late launch of the iPhone. If you recall, the 4 national carriers began selling the new devices on September 21, while we launched the product line on November 8, some 7 weeks later. We also experienced some inventory constraints on certain models. Prepaid net losses in the core markets were 26,000 down from net additions of 37,000 last year. And as you may remember in 2012, we had just launched prepaid in Walmart, so there wouldn’t have been any churn at that time. Total retail customer net losses in the core markets were 97,000 compared to 18,000 net additions last year. Slide 13 shows the trends in smartphone sales and penetration in our core markets. During the fourth quarter we sold 619,000 smartphones which represented 80% of total devices sold, this compares to the fourth quarter of 2012, when we sold 571,000 smartphone or 63% of the total units sold. And 537,000 or 87% of the smartphone sold in the fourth quarter were 4G LTE devices. 247,000 or 40%…

Thanks Steve and good morning everyone. I will briefly highlight our accomplishments in 2013 and then outline our strategic priorities for 2014. On Slide 20, in our wireline business, we learned a lot about rolling out IPTV. we have now launched TDS TV in 11 markets enabling nearly 93,000 total service addresses, and we’ve been very pleased with both the uptake and the ARPU. Earlier in the year, we launched TDS TV in markets using copper based facilities and fiber. We experienced higher costs than expected readying the copper networks, and those findings along with the long-term competitive advantage of fiber, mean that for the foreseeable future we will be focusing our IPTV rollouts in markets where we can economically justify fiber to the home. Accordingly we have allocated a significant portion of our capital this year to fiber construction. We have made excellent progress on our broadband stimulus projects, providing service in 23 markets. We now can offer broadband to an additional 6,900 households and expect to complete the remaining 21 markets in 2014, bringing the total households enabled through stimulus funding to 27,000. When complete 97% of our customers will have access to high-speed data. 2013 saw us enter the cable broadband industry with the acquisition of Baja Broadband. Our cable strategy is based on our belief, that is the natural extent of what we do, providing data, video and voice services to both residential and commercial customers, and allows us to leverage significant expertise within our organization. The integration of Baja is well underway, and planned synergies are being realized. We are pleased overall with how Baja is performing in the first 7 months of ownership. We’re seen good growth in the high-margin data subscribers, which more than offset the expected video subscriber declines. We are rolling…

Okay. Thanks, Steve. Good morning everyone. Starting on Slide 22, TDS Telecom had a very solid quarter with: one, wireline expense reductions more than offsetting declines in wholesale and regulatory revenues; two, cable operations coming in on plan for our first full quarter of operations; and three, HMS producing a 10% increase in recurring revenues on a same-store basis. On a consolidated basis revenues increased 23%, driven from both the Baja cable acquisition and the MSN acquisition, which was acquired on October 4. Adjusting for the impacts of these acquisitions, revenues were essentially flat year-over-year as organic growth in our HMS business offset revenue declines in the wireline operations. Adjusted income before income taxes which is essentially operating cash flow for TDS Telecom, grew 18% year-over-year or $10 million to $66.1 million in the quarter, primarily driven by growth in the wireline coupled with the contributions of the Baja acquisition. Without the effects of acquisitions, the business grew its adjusted income before income taxes, 7% or $4.1 million. Looking at wireline results on Slide 23, strategic gross services data, IPTV and managed IP just about offset the decline in legacy voice services and wholesale revenues. Wholesale revenues declined 9% primarily as the results of changes in the regulatory recovery due to the reform order and lower wholesale rates, as well as continued declines in access lines and minutes of use. However, due to cost control initiatives, SG&A declined 14% or $8.4 million from the same period last year. As a result, operating cash flow margins improved 350 basis points, which drove a 9% increase in adjusted income before income taxes. This is the third consecutive quarter in which the wireline reported growth in adjusted income before income taxes. To put this effort into perspective, we have reduced ongoing employee costs…

Thanks Vicki. As we’ve open the call for questions, I just want to let you know that we also have Jay Ellison, U.S. Cellular EVP for sales and customer service and Mike Irizarry our CTO available for questions. So LaTonya, we would like to open up the lines now.

Thank you. At this time we will be conducting the question-and-answer session. [Operator Instructions] Our first question comes from Phil Cusick with JPMorgan.

So I guess the first question is, can you talk about what the ARPU impact from the credit should be in the first quarter? Have we sort of cleared that up in the fourth quarter or is that going to continue for a while?

Hi Phil, Ken. The credit itself went through in the fourth quarter and it all went through in the fourth quarter, there isn’t any carryover affect from that in the $43 million of points that’s we gave up.

Okay and then I guess on the cable side, can we talk about and you know actually we know with a bunch of private and public cable guys recently and there is just an overwhelming desire to buy assets from a lot of them. So first, are you starting to see the market move given the big announcements in the industry recently? And second how can we be confident that you are going to be disciplined on price given your clear desire to grow in that space?

Sure, good morning this is Vicki. Our strategy for the cable is that it is a natural extension of our core business and allows us to leverage our expertise. We are continuously evaluating opportunities in the acquisition space for cable, and as we do that we look for key factors in the markets that we are looking at, competitive footprint, good demographics, an ability to grow data penetration and we’ve built out a long-term DCS model and based on that we look to see what the opportunities are in order to earn a full return?

Okay I guess and then back to Ken I suppose. Can you talk about the connect side, you’ve talked a lot about the churn from the billing system issues. But should we look at connects to be sort of dragged into 1Q as well, because of whether that’s customer service issues or just the overall sort of customer impression in the marketplace?

Yes, great question Phil, in fact in the fourth quarter customer connections or gross adds were inhibited quite frankly, because our stores were quite busy handling customer matters, but in fact in the first month of the year, we saw a really nice increase in postpaid gross adds year-over-year. So we aren’t seeing that right now, with all these moves have been made recently, I don’t know how that plays out over the next 30 days, but at least to-date I’m very happy with the pickup in activations that we’ve seen in the first part of the year.

Okay. last one and I’ll get out of the way. Can the new billing system handle the EIP payments that people seem to be moving toward or would you have to go back and amend that again to get that capability?

If you mean - when you say EIP?

The sort of over time handset payments.

Yes, what we call device financing that is one of the enhancements that’s in the system that we are looking at rolling out in the first half.

So it’s already - it was already in the billing system plan or you would have to add it?

The core capability is there, you have to design exactly what you want the plan to do, but that capability is there.

Okay good, so you don’t have to go and put that and enhance the system again.

Our next question comes from Michael Rollins with Citi Investment.

Just a couple if I could. First I was wondering if you can talk a little bit more about the CapEx levels for wireless. What’s in it for this year? Are there more opportunities as this network is built out and strengthen for LTE for CapEx to decline further? And then the second thing is how do I think about the cost of the billing in EBITDA and where you might have had like duplicative cost in '13 that might go away in 2014? And one final thing if I could just throw one other question in here. What timing do you expect for wireless to get back to unlevered cash flow positive? So like if you were to take the wireless OIBITDA less the CapEx levels, what’s the timing for that? Is it a year, is it more or less for that to get back to a positive number?

Hi Mike, first let me start with the CapEx number. CapEx was down in '13 over '12 by about 13% and it’s down again this year, part of that has been kind of the work we’ve been doing with LTE. This year, while we start the year with about 87% of our customers covered that’s only about 2/3 of our cell sites, so our plan right now is to push that out this year, probably covering about another of 1100 cell sites, which will get us somewhere 93% or so of our customer maybe 88% of our cell sites, so that’s going from 2/3 to 88% that will give us a little bit of a job next year to finish the LTE rollout, we expect to get to all of our cell sites when we are done. So just given the fact that we’re going to get to 88% of our cell sites about this year, next year’s LTE piece isn’t as big, so there is a potential there. At the same time we don’t have much capital in our plan this year around voice over LTE it’s something that the team has been doing a lot of testing on, but there is enough questions about that that we’re going to let that go down the path a little bit, I just mentioned that because that could impact '15, if LTE - both you kind of really get some steam behind, but right now there is enough bumps in the road on that one that we aren't going to go rushing there.

Billing, yes.

So around billing, would you repeat your question?

So how much expense that was sort of duplicative was in the 2013 numbers that might go away in 2014?

Okay, so, got it, when you say expense, part of it was we talked in the past about just a pure $60 million of actual expenses to implement that system, right? And that was -- a lot of that was third party stuff that is gone, we don’t need to do that, okay. And on top of that we [indiscernible] wound-up, just given away some credits that were about $43 million, right? So there are 2 large one-time items right there.

And let me just add to that Mike, with the delays in billing that we saw. We had an increase in our accounts receivable balances, and in providing an allowance for potential uncollectibles there. We had a bit of a spike in bad debt expense in the quarter. If you looked at it year-over-year and tried to estimate the effect of that larger balance it’s probably something in the range of about $30 million?

Then timing for unlevered free cash flow, the only reason, Mike, for me to talk about that I got to kind of talk about - I’ve already given your CapEx, right, so I got to, in fact, talk about EBIT, and I’m just not in a position to give you guidance on that right now. So I’m going to avoid answering your third question.

And, maybe, just one last thing, on the rate plans and all the things that you are seeing, do you view the changes as more repackaging versus incremental competition? Or how do you view the impact of these rate plans on your business model?

So there’s a lot of different changes going on. Some of them were just repackaging and some nice marketing, others of them are getting to the point where they have more of a revenue impact. As I have said in the past, being in the markets that we’re in, what a couple of the carriers directly do doesn’t impact us much because we aren’t there. But when you get the 2 big guys now to start responding, those are the ones that are in the markets that we’re in, and those are the ones that we got to make sure that when we are compared against them we’re still providing a good value to our customers. And so some of them have moved beyond repackaging is the short answer.

Our next question comes from Ric Prentiss with Raymond James.

I joined in progress, so I hope I don’t ask you anything that was already asked. Ken, I heard your comments talking about what it would take to improve margins, you have to turnaround the subs, and then you have to grow revenue on top of that as well. If you take those 2 parts, where are we at as far as getting to turning around subscribers? How many more quarters of negative -- it sounded like one of the goals for '14 was to grow the sub base. So it sounds like within '14 you feel you will grow, is it full calendar year you'll grow?

Again Rick. What we talked about at the very beginning of the call was how as a result of some of the pricing moves the fact that churn is currently still higher than we would like it to be, we aren’t kind of talking about revenue guidance this is kind of related to that. In fact, what we did say is that churn voluntary is starting to come back, go back down from the peak we saw in the fourth quarter. Involuntary is actually growing right now, because during the quarter with some of the billing questions that our customers had, we had slowed down some of our collection activity, now we’ve got to work that through the pipeline. So that’s the one that’s growing, we are actually starting to see some improvement in voluntary. And we are seeing some real nice growth year-over-year on gross adds. If we continue that gross add growth and get churn back to where we expected to be, we will be meeting your objective and my objective which is growing the customer base.

Okay and then on the ARPU side, I understand you are not giving financial guidance, just kind of looking for inflection points to understand when we could see the turn coming. I think I heard that the, the credits that were given on the billing systems in December, if they were excluded ARPU actually would have been up 8% year-over-year. Can you just do the math for us to make sure we are comparing that to the right number? So what would ARPU have been in 1Q or in 4Q '13 if you hadn’t given that?

Hang on a second Rick.

Cause I assume is that across both categories postpaid and pre or was is just post?

That was a postpaid number that we quoted.

So more like $58 maybe.

Yes, hang on let me just find that. It was up about $4.50 so $53.53 plus $4.50 right around $58 bucks.

Okay, so that would have been quite nice and you’ve got that fully affected to Phil’s point back in the fourth quarter. The iPhones I think I heard $257,000 sold in the quarter, but there was some supply constraints and obviously you got it late in the quarter?

Yes sir.

Still demand, still looking I think I also heard increasing iPhone sales so would you expect you can do more sales than that $257,000 on a quarterly basis, given late in the quarter in constraints or did you already supply the peak or the pent up?

I will say that right now the mix hasn’t changed dramatically, fourth quarter I think it was like 1/3 of our mix and it was kind of a nice placing of, 35% maybe 40%. Okay and part of that was some of the customer upgrades, customers that have been waiting wanting for it, that have been waiting for the phone, it’s at a level that I’m comfortable with, it’s not so high as to push out other very strong phones in the line up or so low as to make us worry about our commitment or anything else, it's a nice place to be.

Okay. And then the final one, because I think we are seeing maybe the changes you need to get back to the positive adds and the positive revenue growth. On the strategic side, you know me I got to ask the tower question. You mentioned in the press release complete or in the presentation complete the monetization of the non-strategic towers. Can you update us on what that means completed? And then what about the core towers? It’s hard to imagine that those are strategic, why not start leasing up those towers to the ultimate maybe selling them someday down the line when you need the cash?

Okay, 2 different question there, first one, as part of our transaction with Sprint, we are letting them get on some of the cell sites that are left in those markets and we are waiting for that to be completed, so they kind of give them first choice on those cell sites and then as soon as that’s done, we are going to go out and test the market, see what the value is and make a decision that process has taken longer as they are working through all of their network changes. As soon as that ball stops moving, we’ll be able to go forward with it. Quite frankly I thought we had already been there and we aren’t there yet and so I’m hesitant to say it's going to be next month or next quarter, because it's just taken longer than we would like. So that’s one, it's going to get done, we aren’t backing away from the strategic direction; we are just trying to get the darn thing done. On the other one, we continue to lease up our towers, we’ve got people that are working on that, looking at Steve to see if he can tell me how much revenue we drove out of that last year, but there is $30 million or $40 million of rental income.

It's $46 million.

It's $46 million they are all jumping at me. My mind back when it was $30. We are up to $46 million on those and we’ll continue to push that forward and if there are other opportunities or other learnings that come out of doing the non-strategic towers, we will look at again when we're done, but right now our focus is continue to lease the ones that are remaining in the portfolio and get the ones that are not part of that core market done and completed.

Sure, although you haven’t taken it maybe to the extent that that AT&T did and T-Mobile did and Shenandoah still does, which is create, almost an internal tower company yet for the core towers, have you?

We’ve got a group of people that work on that full-time, whether that’s a - is it separate legal entity? No, but it’s a group that’s focused on it.

Okay, so there is a focus on that?

Well, absolutely.

LaTonya, we have time for one more question please.

Our last question will be from Stephen Mead with Anchor Capital Advisors.

Just a question on the depreciation level at U.S. Cellular on a quarter-over-quarter basis. What is -- how much was sort of one-time or items in that line and then...

The quarter - well the absolute number that we say is incremental was about $45 million in the quarter.

Okay, in terms of incremental depreciation and amortization.

Yes that’s goes away - that goes at the end of - it goes away at the end of January of this year.

And then have you reported on the equity and earnings on consolidated? Have you reported how much was the deconsolidation of the property that occurred in 2013?

We don't break out New York the 1 and 2 separately. Do we Steve?

Well I mentioned that in the fourth quarter there was $6 million of equity basis earnings related to New York 1 and 2.

That’s okay, and then the other thing is in terms of the billing system or whatever and the things that went wrong, do you have any recourse to the vendor?

That’s not a question that I think I can - there are - we are working together with our vendors let's put it that way.

Who is the vendor?

Amdocs.

Good job.

Thank you all for your time today.

Thank you this does concludes today's teleconference; you may disconnect your lines at this time, and have a great day.