Jane McCahon - VP of Corporate Relations Doug Shuma - SVP and Controller, TDS Ken Meyers - President and CEO, U.S. Cellular Steve Campbell - EVP and CFO, U.S. Cellular Vicki Villacrez - VP, Finance, and CFO, TDS

Simon Flannery - Morgan Stanley Rick Prentiss - Raymond James Phil Cusick - JPMorgan Sergey Dluzhevskiy - Gabelli & Company Arun Seshadri - Credit Suisse Barry Sine – Drexel Hamilton Kevin man Dino - RGG Capital

Greetings, and welcome to the TDS and U.S. 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. I would now like to turn the conference over to your host, Mr. Jane McCahon, Vice President of Corporate Relations TDS. Thank you, ma’am, you may begin.

Thank you, Latonya. Good morning everybody and thanks for joining us. I wanted 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 in offering prepared comments are, from TDS, Doug Shuma, Senior Vice President and Controller; from U.S. Cellular, Ken Meyers, President and Chief Executive Officer; Steve Campbell, Executive Vice President and Chief Financial Officer; and from TDS Telecom, Vicki Villacrez, Vice President for 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. 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 paragraphs in our press releases and the extended version included in our SEC filings. Shortly after we released our earnings and before the call, TDS and U.S. Cellular filed their forms 8-K, including today’s press releases and their SEC Form 10-Q. Taking a quick look at upcoming conferences, TDS will be presenting at the Drexel Hamilton Conference on September 30, New York, and will be hosting an analyst and investor visits during CTIA on September 10th. We will also conduct our annual European road show from September 29th through October 3rd. Please let us know, if you like information about any of these events. And keep in mind that we have an open door policy, so if you are in the Chicago area and would like to meet with us and members of management, the IR team will try to accommodate you, calendars permitting. Before we turn the call over to Ken, Doug Shuma will review second quarter accomplishments at the enterprise level. Doug?

Thanks, Jane. Turning to slide four, we continued to execute on our capital allocation strategy and review our portfolio to optimize performance. In the quarter, we returned value to our shareholders in a form of $17.3 million in TDS share repurchases, another $14.5 million in dividends. U.S. Cellular repurchased 6.3 million of its shares. As you probably saw last week both TDS and U.S. Cellular filed amendments to their credit facilities to increase their leverage covenants. Due to our conservative approach to funding the business and maintaining strong levels of liquidity, we felt this change was necessary due primarily to the temporary cost associated with billing system. As a result of the change, our current debt to EBITDA test will increase to 3.75 times that ultimately reduced back to 3.0 level in 2017. As our business units work to grow profitability and earn their cost of capital overtime, TDS Telecom identified four small nonstrategic ILECs please do not believe can be returned objectives. During the quarter, we entered into agreement to sell the four companies and expect the transaction to close in the third quarter. Also during the quarter, TDS purchased two small tuck-in cable companies in its Baja markets. Vicki will provide additional details. U.S. Cellular continues to look for opportunities to monetize its nonstrategic assets. As we have previously announced, U.S. Cellular is already sold more than $400 million of nonstrategic spectrum. Given the significant current valuation of the spectrum, U.S. Cellular is continuing to look to monetize other non-operating spectrum. Subject of course the anti-collision will associated with the upcoming auctions. After sell of the non-core towers, we’re making very good progress and hope to launch it in the second half of this year. We do not have any further details at this point. Before I turn the call over to Ken I wanted to comment on our preliminary thought regarding the recent transaction announced by Windstream. Is anything who is known TDS over the years would agree, we are all about minimizing taxes as such this is very interesting deal and one will examine. We need to gain a deeper understanding of how this will deploy our specific circumstances and financials and more importantly the implications for operating and strategic flexibility. As you have heard say in the past, we consider our network assets very strategic. Clearly we need additional time to evaluate so we won’t have any more to say on the matter at this time. And now, I will turn the call over to Ken Meyers.

Thanks, Doug. Good morning. And thank you for the opportunity to talk about the progress we’re making against our two most important strategic priorities for this year. Turning around customer growth metrics and driving revenue growth, as we discussed and shown on slide six, driving subscriber growth is our top priority. This is a function of both increasing gross ads and managing churn. We continue to have real success from tracking new customers to U.S. Cellular. Core postpaid gross additions for the second quarter increased 15% over last year with June being the first positive month of postpaid net additions since 2012, and we continue that positive trend in postpaid growth again in July. We’ll take a few minutes to talk about some of the factors that are helping us win over and in many cases win back customers to U.S. Cellular. The biggest year-over-year improvement comes as you would expect from the addition of the iPhone to our device line up. We continue to like the mix of iPhone in our sales, representing about 32% of smartphone sales this quarter. With that, we’ve already fulfilled our first year commitment channel. As you may recall in October 2013 we launched our share with data plans, which we call shared connect. We now have 22% of our postpaid customers on these plans, up from 13% from the first quarter. And average device per count rose sequentially from 2.39 to 2.46 devices per count. We’ve seen great taperings on this plan reflecting the underlying trend of smartphone adoption, which when combined with the strong growth in data consumption has increased average revenue per user and average revenue per account. On April 7, we introduced our equipment installment plans. Steve will provide additional information on the accommodating details and the impact on our…

Thank you, Kevin, good morning, everyone. As I begin my comment I want to highlight that the year-to-year comparability of the financial statements contained in our press release is impacted by two significant transactions that occurred in 2013, the deconsolidation of the New York 1 and 2 partnerships in April and the divestiture of the Chicago, St. Louis, and other Midwestern markets in May. Therefore to facilitate your understanding of our business performance for the second quarter, we’re including in today’s presentation and we’ll focus primarily on comparative operating and financial results for the core markets, where we’re now focused. These results presented for the core markets remove the impacts of the aforementioned deconsolidation and divestiture transactions. So beginning with customer results shown on slide 8. In the core markets, postpaid gross additions for the second quarter of 2014 were 190,000, increase of 25,000 or 15% compared to a year ago. Postpaid churn for the quarter was 1.7% up from 1.6% last year, resulting in a net loss of 26,000 customers for the quarter, quite an improvement of 27,000 from last year’s result. I will talk more about postpaid churn in a minute. In the prepaid segment, there was a net loss of 4,000 customers down from net additions of 8,000 last year. The decline here resulted primarily from the lower gross additions in the national retail channel. The retail customers in total there was net loss of 30,000 customers this year compared to a net loss of 45,000 last year. The improvement reflects the increase in postpaid gross additions that I mentioned previously. I want to say a few more words about postpaid churn in the core markets. The chart on slide 9, shows postpaid churn over the period beginning in January of 2013 and continuing through the end…

Okay, great, thanks Steve, and good morning everyone. Turning on slide 19, as TDS Telecom we continue to execute on strategic priorities to drive growth in areas that will enable us to be successful and improve our returns. To the sense, a number of transactions we’re entered into during the second quarter which I will highlight in my overview. -- our wireline segment had another solid quarter. We are very pleased with the uptake of IPTV and are ahead of schedule with our rollout as new markets this year. We have completed the sales out for the majority of our broadband stimulus markets and are seeing strong broadband growth. Cost reductions had a meaningful impact on our overall comparability driving a 14% increase in adjusted income before income taxes. This is the fifth consecutive quarter that wireline has increased its adjusted income before income taxes year-over-year as the entire organization continues to stay focused on cost improvement activities. As a result of continually reviewing all of our operations we [indiscernible] four small ILEC territories including three Missouri locations and one in Oregon. Our cost and demographic metrics in these markets did not support the capital investment required to be the most competitive data service provider in these markets going forward. In our cable operations, we are continuing to work to upgrade our video products with about 20 new channel launches at across Baja markets. Additionally to drive broadband penetration, we adjusted our pricing to be more competitive including new emphasis on our 50 megabit product as our lead promotional speed and 100 megabit as the premium service. During the quarter, we acquired two markets passing approximately 9,700 homes and [indiscernible] part of New Mexico, which are near several existing markets. We plan to upgrade video services and add internet service…

Thanks Vicki and Latonia, we would like to open it up for questions at this point.

Thank you. At this time, we will conduct a question-and-answer session. (Operator Instructions). Our first question comes from Simon Flannery with Morgan Stanley. Please proceed with your question.

Thank you very much and nice job on the turnaround in the ads and the churn. I guess on that topic, Ken, can you talk about, is it reasonable to expect that churn will return to historic levels over the second half of the year given the trends you are seeing or do you think we might be in a, we saw good churn number out of the bells, we might low year before the iPhone 6, so that we are kind of, people aren’t really switching carriers right now? And then secondly, you cut your credit facility, can you just talk about your interest in AWS-3, is that something that you are likely to be a participant in? Thanks.

Couple of things, so talking about -- I think there is a low, I would call the lowland competitive activity out there. When I think about our case, what we have is all the things that we have been working on over the last couple of quarters turning to fruition where the billing system that caused some angst for us, is much, much improved now. We have got multiple, we have got almost 90% of our customers with LTE. We have got the iPhone that is further rounded out our device portfolio, each one of those items cause churn and what we are seeing is just all those being eliminated one after another. So, June is low, I have been surprised before but I am not viewing this as low but rather as an expectation of what we need to deliver going forward. In terms of the AWS-3, I expect that we will be there. We have been in most of auctions in the past as we continue to try to ensure that our customers are getting a very strong network experience, we are going to want to make sure that we have got add spectrum to provide them both the speed and capacity that we hope they going forward with this explosive data product.

Okay and just a quick follow-up on that. How are your roaming relationships developing on LTE? Are those rates where you want them to be?

We don’t have an LTE roaming agreement in place yet. There is a lot of complexity to getting roaming with LTE working and we have been doing a lot of testing with all the major carriers out there and we continue to work towards an agreement. I am hopeful, we will have one by the end of the year which has kind of been my goal for the last six months but we don’t have one yet.

Our next question comes from Rick Prentiss with Raymond James. Please proceed with your question.

Thanks. Good morning. Couple of questions, first obviously turning around net ads was critical first step here. You mentioned connected devices are now up to I think I heard 4.5%, how many tablet sales were there in the quarter and what are you seeing as far as demand for tablets?

: Tablets grew 12 probably 12% to 13% of our total postpaid gross ads were in the tablet area themselves. We are seeing nice demand, my own opinion is that we are continuing to turn, I like them when I call it once but I don’t want to focus fully on those. I think of every postpaid handset, I can have knowledge in future and add a tablet to later as opposed to just do it all tablets and has combining it to the customer base we have now. So we’re trying to actually push both of them and kind of comfortable with where we are right now. We made a big turn in that area though.

And you touched on another which is I think important for the industry to embrace is, what is the ARPU what’s the right revenue metric tablets, would I assume pull down the reported ARPU if you look at it just as a lower priced monthly subscription but would increase if you look at on a revenue per account basis because usually there is somebody attaching it, how do you think about reporting of ARPU and looking at the different and the equipment installment plans obviously moving things as well.

Yes, so I start with the objectives to drive revenue, period end of store and there are lots of levers, and as you pull those they are going manifest themselves in different metrics you’re looking at, because [indiscernible] driving the metric as much as driving the revenue and metric is just a device to help us understand where it’s moving. So with respect to handset I’m very interested in the average revenue per unit per customer coming out of that and with the continued explosive growth in data and on an apple-to-apple basis we’re looking that to grow. Now at the end of the day its depending upon what happens with [indiscernible] that number is going to shift a little bit if I look at it all I am still looking for it to grow, I’m not going to hung-up with some consolidated metric like ARPU starts to move in different way if it's because the good news that you are having more connected devices and looking at. So I believe focus on total revenue and looking at each product independently.

Great. And these are my question which is EIP which is such a huge swing to revenue and also reported AI but in your ‘14 guidance what assumption have you made I think I heard 15% of smartphones are in EIP in the quarter June was up about a quarter but what are you assuming EIP looks like the rest of the year in your guidance.

We’re assuming for the second part of this year that EIP sales will be about 25% of the gross add number.

And if we were to go higher than that revenues would go up in area would go up based on your slide.

They would, yes.

Our next question comes from Michael [indiscernible] with Citi Investment Research. Please proceed with your question.

Hi, thanks for taking the questions. I have two questions, first question is, can you compare the cost for sub, the cost of acquisition first half however you want to define what you’re seeing in the market versus what you’re expectations are you able to do it for at or better than maybe what you expected or you are finding the competitive environment is causing that number decline? And then the second thing is Ken now you’re at the home of U.S. Cellular, are you taking any different approaches in the way that you give guidance in terms of looking at the potential benefits of EIP and maybe trying to be a little bit more conservative on the outlook for cash flow, or are you taking the same types approach which is more the base case I think is what you done historically. Thanks.

Couple of parts there I’m looking, first question has to do with cost per add and any major shifts there and what I would say is, with nothing has shifted dramatically in the marketplace around the cost and a customer from I call competitive volume, clearly Mike as you think about a customer that comes through on an equipment installment plan because they’re paying with that piece of equipment the cost is very different albeit part of it has do to with our revenue shift. So if l look at a net basis I don’t think it's that dramatic, one, two, those are start talking about and now it’s clearly the other difference is some of the ads are out there [indiscernible] they have a different and lower incremental cost but none because of the different subsidy model. So again it gets back to almost a little bit of the question that was asked earlier it’s more of a product-by-product look but I have not seen anything that is dramatically shifted within the products, a big difference. Second with respect to guidance, are we being more concerned I don’t that we’re being market. If I think that clearly there is a lot of change going on and earlier this year there was so much going on that we did not think that there was enough confidence within a meaningful range to give guidance big part of that had to do with where we were in customer growth at the time. Now I think the picture is a little bit clear, clearly we still have the same risk around competitive theme but that's still think of it as [indiscernible] more or less conservative from the past.

Our next question comes from Phil Cusick with JPMorgan. Please proceed with your question.

Hi guys thanks. I guess just following up you just said EIP assuming for the second half, is that because July was at that level or do you really anticipate no real expansion and availability or you’re pushing key hardware customers? JPMorgan: Hi guys thanks. I guess just following up you just said EIP assuming for the second half, is that because July was at that level or do you really anticipate no real expansion and availability or you’re pushing key hardware customers?

: We’re not pushing the hardware to the other, we’ve taken this approach of being a retailer and making sure we have whatever the customers have. We saw lots of growth in that in the first quarter and that 25% with our most recent data point and that what’s we've used to estimate where we think the rest of the years calls to accept that changes dramatically. We'll let you know that’s our best estimate at this point.

Okay and as I think about churn, it looks like voluntary could be actually down year-over-year in the chart that you showed and involuntary still up a little bit, do you anticipate involuntary coming down further or do you think go back to serve a normal level?

No I think we would expect it come down a bit further from where it was in the second quarter.

Okay and then do you think voluntary is still coming down here as you look at such as the potential for churn out there in the base or do you think this is about as good as it gets for a while?

I like the word potential. I believe there is potential to continue to improve churn and we are actively working to do that.

As you look at July again you said that you’re positive on subscribers, is that gross adds continuing to ramp up here because it seems like we are still at a fairly low levels versus where you’ve been historically?

I am not really prepared to go into a great amount of detail about July still, but to say that all the things that we saw going on through the second quarter that got us to turn in June continued into July. And the July too was positive.

And then last thing, you’ve talked about the potential tower sale, is the Sprint deal done? Do you know what those towers are going to look like?

Yes, Phil, it’s Doug. We’ve made substantial progress with Sprint. We are not quite done yet which is why I am not quite ready to tell when it’s going to be launched.

Our next question comes from Sergey Dluzhevskiy with Gabelli & Company. Please proceed with your question. Sergey Dluzhevskiy - Gabelli & Company: A couple of questions, one on the profitability side for U.S. Cellular obviously profitability has been declining. You’re making progress on the customer acquisition and customer growth and potentially this could translate into revenue improvements, but 2014 is going to be another year where profitability is going be lower than the previous year, could you talk a little bit about your outlook for profitability going forward, at what point do we see an inflection point in margins and obviously you would want to see customer growth but you also want to make sure that this is profitable revenue growth as well?

As we talked about this is the year that we’ve got, the year the impact of the iPhone all year going through our customer base that we haven't had in the prior years. And so from day one here, the job has been putting the customer growth around first because you think about the last some period of time as customer growth -- as customers have shrunk you lost revenue. And we need to keep growing revenue in order to grow profitability, yes, [indiscernible] and the margins on the cost side, but right now and for the rest of this year the focus is going to be continuing to grow the revenue base. Sergey Dluzhevskiy - Gabelli & Company: Right, in terms of one question on use of cash, so TDS is going to sell Airadigm BCS licenses to U.S. Cellular for about $110 million, how should we think about the use of the prices from this transaction, is this an opportunity for a more meaningful buyback for you guys?

Yes, Sergey, the number is 91 million, not 110. So we’re going to continue with our current slots for you the 25%, 75% and that’s [indiscernible] business versus returns to shareholders. I think we saw an increase in our share buyback this past quarter and depending on market condition and need for other purposes whether it’d be acquisitions. I wouldn’t say anything special is going to happen over that 91 million. Sergey Dluzhevskiy - Gabelli & Company: Finally on the TDS Telecom side, you mentioned that you’re divesting for all ILECs, what are the revenues in EBITDA for those ILECs and what are the approximate prices that you expect?

: Yes Sergey, these ILECs are very small. They are very immaterial to the overall business less than half a percent, 3.4 million on the revenue side.

Our next question comes from Arun Seshadri with Credit Suisse. Please proceed with question.

First, I wanted to ask in terms of SG&A, the higher bad debt expense any thoughts on the outlook for that?

Yes. This is Ken. Let me just say that, I think part of that is on the call transitional, in that we just are rolling out the equipment installment plans. And because of that you are recording a large receivable now that has -- now almost part of it has a two year -- average call it a year, right. And so we would have been conservative in setting up the reserves for those longer-term receivables which historically are part of the business model.

Okay. Got it. So is that going to result in sort of, year-over-year comparison continuing to be weak for the near term?

I think this number as you first build up your EIP program and until we have enough experience to pulling that down, you'll see from year-over-year pressure in that number.

Okay. Great. Thanks And then as far as, sort of, debt issuance potential at USM how should we think about this and how should we expect you to potentially fund your participation in the upcoming spec from options?

Well, right now USM has got $400 million of cash and the balance sheet is got an unused revolver on top of that and we’ve got some non-strategic spectrums that we’re looking at liquidating as well as potential power transaction. So between those I think we’ve got sufficient liquidity for paying this over the next 12 to 18 months.

Okay. Great. Thanks. And then finally in terms of -- you mentioned to a response to your previous question a potential for further, any leverage you can pull on the cost side. Any additional color you can give on that?

Not at this time. I think that we’re still -- we’re going to focus on the revenue side for the rest of this year, but the opportunity is -- I suggest exist in various areas.

Our next question comes from Barry Sine with Drexel Hamilton. Please proceed with your question. Barry Sine – Drexel Hamilton: On the wireless side, I guess for Ken, I wanted to ask about any promotional activity that you did in the quarter that may have impacted gross adds, obviously you have a superior network and I guess you priced accordingly but have you done any promotional pricing off of the published rates? And then also in terms of activity, there’s a number of carriers in the wireless industry doing buyout your contract plans and for you guys you’ve have higher churn in the past, but now you’re in a much better position with competitive handsets, plans and then networks. So anything along those lines in terms of a buyout your contract either as a formal program or occasional promotional activity?

Good morning Barry. So I don’t think there are any special offer, rich sheet kind of promotional activities. Like everybody else we certainly have same programs or whatever for our customers to ensure that we have got them on the right rate plan. One of the things that we do regularly as part of our service is to take our customers through what rate plans they are on now and how they maybe better served by some other offers that we already have out at the marketplace. The other part of the question, I am sorry -- yes the buyout, interestingly we have that available it is not moving the needle a lot in terms of [indiscernible] with customers, but it’s a barrier remover for those that want to come back. Barry Sine – Drexel Hamilton: Okay. And then you talked about on the prepaid side, activity at some of the national retailers, could you shed a little more light on that what is going on, I remember a year or so back when you would talk a little more enthusiastically at programs at retailers like Wal-Mart what’s currently going on and why is that negatively impacting edge?

Well, I think on the prepaid side, I am going to let Jane talk about it a little bit. But for us, we need to make sure that we’ve got distribution that is local and convenient to customers wherever they are at. And that we’ve got all the different products that they may want. Prepaid happens to be one that there is a meaningful segment that lots of and in fact a lot of our network and else we’ve got it out there, we aren't necessarily satisfied with where its half right now and we’re going to continue to keep tweaking that product as go forward. I think it’s got a place in our portfolio. We’ve got to continue to work on it.

I think the main thing there relatively prepaid international retailer we’ve been transitioning out of U prepaid product into our own phone in the box and our national retailers. And that has really just competed in this quarter. So we’ve got that done as well as working through some connectivity issues with our national retailers.

So that U prepaid product was really more of a cobranded that just didn’t carry our name and as we meet this transition in the U.S. Cellular name and therefore the reputation for the network will be stronger in the local market place. Barry Sine – Drexel Hamilton: And my last question follow up on the ILEC sales, obviously fairly minimal quarter, but is that an ongoing program that you’re starting to look at the ILEC portfolio and perhaps call out some other properties you may own?

This transaction I said was very small, we serve a large number of ILEC markets and they are all very, very different, where right now our priority is to invest in our most attractive markets where we can make the economics make sense for cyber investments. But that’s not all of our markets and some of our very, very small markets are benefiting right now from our on U.S. stimulus programs but without that support we have several markets that we cannot make the economics work, to provide further broadband speed or IPTV going forward. So, in this case the logical buyer was a nearby ILEC that can leverage our cost structure and this is a constant process of looking across our entire footprint and if there is a market that we don’t see we can make a return on, we’ll look at that.

(Operator Instructions) Our next question comes from Kevin man Dino with RGG Capital, please proceed with your question.

Just a more of a long term macro picture, you talked about the future uncertainty in pricing, you talked in the past about being a follower. Clearly with all the M&A that's on in your industry starting with Leap Wireless, all things at AT&T and Verizon have done over the years. Obviously recently with Windstream, the strength in T-Mobile, I guess I asked the question as you think about your business and you look about -- and you look over the last 10 years, the return to shareholders is zero. The return in last five years is also zero versus 150% for the S&P. I just wonder in my head, what you think about that and sort of why you insist that your current strategy is a better strategy to create value for shareholders than taking part in M&A which is obviously been very rampant in your industry? Thank you.

This is Ken Meyers, if I understand the question I think we have -- as we said we take a long term view to this industry I don’t see anything that’s changing around that, we have constantly talked about how we try to set expectations in terms of what we are going to deliver from an operational standpoint that’s looking our current plans and the controlled situation we’re in we don’t talk about promises we are on, M&A activity involving this, that's not something that has been part of our strategy for the last 20 some years.

There are further questions in queue at this time. I would like to turn the call back over to management for closing comments.

Well, thank you for joining us this morning and please let us know if you have additional questions.

This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation and have a great day.