Telephone and Data Systems, Inc. (TDS) Earnings Call Transcript

All right, and I will present it. Thank you very much. On behalf of Kenneth Steiner, proposal #5, equal rights for each shareholder. Shareholders request that our Board take steps to ensure that all of our company's outstanding stock has an equal one vote per share in each voting situation. This would encompass all practicable steps, including encouragement and negotiation with current and future shareholders that have more than one vote per share to request that they relinquish for the common good of all shareholders any preexisting rights, if necessary. This proposal is not intended to unnecessarily limit our Board's judgment in crafting the requested change in accordance with applicable laws and existing contracts. This proposal is important because certain shares have supersized voting power with 10x the voting of other shares. This proposal would even allow a 7-year transition to equal voting rights for each shareholder. With certain stock having 10x more voting power, our company takes our shareholder money but does not give us in return an equal vote in our company's management. Without an equal voice, shareholders cannot hold management accountable. Even though the Carlson family controls more than 51% of the voting power, this proposal received 29% to 36% support for 6 years. In spite of these 6 majority votes year after year from regular shareholders of TDS, the Carlson family's TDS Voting Trust continues to oppose democratic corporate governance. Unequal voting rights can result in subpar director performance. Mr. George Off with 24 years of tenure was rejected by 27% of shares when a 5% rejection is the norm. Mr. Wade Oosterman, the newest member of the Board, was rejected by 18% of shares, not a good start. I'll also note that Mr. Carlson has 54 years of tenure. Corporate governance advocates as well as many investors and index managers have pushed back on the TDS-type dual-class share structure. As an example, social and mobile game maker, Zynga, announced moving to a single-class share structure in 2018. Zynga executives said its old multi-class share system could limit the ability of other stockholders to influence the company and could negatively impact its share price. There should be urgency in adopting this proposal since TDS stock last saw a price of $59 in 2007. Please vote yes, equal voting rights for each shareholder proposal -- or each shareholder, proposal #5. Thank you very much.

Mr. McRitchie, thank you. And operator, will you please now mute Mr. McRitchie's line? For the reasons set forth in the notice of annual meeting and proxy statement, the TDS Board of Directors recommends a vote against the shareholder proposal that has just been presented. To be approved, the shareholder proposal would require the affirmative vote of a majority of the votes that could be cast by the holders of Series A common shares and common shares of TDS voting as a group. In the election of 4 directors, the holders of common shares are entitled to 1 vote for each common share registered in their names. In matters other than the election of directors, the holders of common shares are entitled to 0.521393 votes for each common share registered in their names at this meeting. The holders of Series A common shares are entitled to 10 votes for each Series A common share registered in their names. The Series A common shares vote with respect to all matters, except the election of the 4 directors elected solely by the holders of common shares. If you have not yet completed delivery of your proxies or ballots, please do so now since we will be closing the polls for voting at this time. It is now 9:17 a.m. on May 19, 2022, and the polls are closed for voting. Since the inspector of election has not informed me of any changes in outcome on any of the proposals, we will proceed with the announcement of the voting results at this time. With respect to the election of directors, each of them received a substantial majority of the votes that the class of stock voting for such director. Accordingly, each of such persons has been elected as a director of Telephone and Data Systems, Inc. for a term expiring at the 2023 Annual Meeting of Shareholders or until his or her successor shall have been elected and qualified. The proposal to ratify the selection of PricewaterhouseCoopers LLP as independent registered public accountants for 2022 has received the affirmative vote of holders of a substantial majority of the combined voting power of the Series A common shares and common shares. This proposal is therefore also approved. The proposal to approve the 2022 long-term incentive plan has received the affirmative vote of holders of a substantial majority of the combined voting power of the Series A common shares and common shares. This proposal is therefore also approved. The proposal to approve, on an advisory basis, the compensation of our named executive officers has received the affirmative vote of holders of a substantial majority of the combined voting power of the Series A common shares and common shares. This proposal is therefore also approved. The shareholder proposal did not receive the affirmative vote of a majority of the votes that could be cast by the holders of Series A common shares and common shares of TDS voting as a group, present in person or represented by proxy, and entitled to vote with respect to such matter at this annual meeting. Accordingly, the shareholder proposal has not been approved. The inspectors of election will tally any additional votes received after the commencement of this meeting and prior to the closing of the polls and furnish a written report of the final vote count with respect to the matters voted on today, which will be included in the minutes of the meeting. These voting results will be reported on a Form 8-K that will be filed within 4 business days of today. Since there is no further business to come before this meeting, the meeting is adjourned. And at this time, LeRoy T. Carlson, Jr. will make a brief presentation. Ted?

Thank you, Walter, and good morning, ladies and gentlemen, and thank you for joining us today. My comments today include forward-looking information. Therefore, I ask that you review this safe harbor statement. You can find the slides for this presentation on our Investor Relations website, along with related SEC filings, which include a description of important factors that may cause our actual results to differ from forward-looking statements. At TDS, our mission is to provide outstanding communication services to our customers and to meet the needs of our shareholders, our people and our communities. Supporting associate safety and well-being has remained a top priority throughout the pandemic as our businesses continue to provide critical communications and data services that customers and communities depend on. To position the company for long-term sustainability and growth, we are actively investing in our networks, services and workforce to bring high-quality wireless and broadband technology to our customers. In 2021, U.S. Cellular grew total service revenues, including core postpaid revenues, and generated positive momentum in the growth areas of our business, business and government, prepaid and fixed wireless. Frontline associates persevered to a very challenging environment due to the ongoing pandemic and the associated requirements and restrictions. We made significant investments in our network to ensure we are providing high-quality connections in all our markets, especially those underserved by other carriers. We launched our Americas locally grown wireless branding campaign which is gaining traction and will continue to evolve. In 2022, U.S. Cellular is focused on executing its mission of connecting our customers to the people and things that matter most to them. We will leverage our regionalization strategy to further enable a community-focused, go-to-market approach and drive a deeper understanding of our customers. We will also continue to invest in our business and government line with an emphasis on new distribution opportunities and ramping up our sales efforts. In addition, we will aggressively pursue infrastructure -- federal infrastructure, state and local funding as part of our desire to bring better connectivity to underserved customers. We are committed to increasing operational efficiency in 2022. Maintaining expense discipline through operational efficiency is crucial to us achieving better returns on capital. U.S. Cellular's multiyear network modernization program is on track as we offer 5G in portions of substantially all of our markets and will further expand our 5G footprint in 2022. Test trials using millimeter wave spectrum for fixed wireless access are continuing to validate network performance and customer experience. Our work deploying 5G millimeter wave technology positions us as an industry leader in delivering affordable, high-speed connectivity to rural America while presenting exciting new business opportunities for U.S. Cellular. In 2021, TDS Telecom continued its transformation into a premier broadband provider, making significant progress in upgrading speeds and deploying fiber technology in both incumbent and expansion markets. TDS Telecom surpassed $1 billion in revenues and exceeded 0.5 million total broadband connections. In addition, TDS Telecom launched 2-gig broadband speeds in select markets and announced the goal of reaching approximately 1.2 million fiber service addresses by 2026. In 2022, TDS Telecom will focus on executing its strategies as we continue to grow broadband market share in communities we serve and generate revenue growth. We will continue seeking out opportunities to improve the customer experience and complement our robust product offerings, which include high-speed broadband, best-in-class WiFi and enhanced TDS TV+ video services. I thank each of our shareholders, our debt holders and our associates for your support which enables TDS to continue to serve our customers well and provide them with excellent essential communication services at this time -- at the time of their great need. Are there any questions from our shareholders? If not, I will turn this call back over to Walter.

Well, thank you, Ted, and thank you very much, ladies and gentlemen, for attending this annual meeting, and please stay safe. We know we have a number of officers and employees across the TDS and U.S. Cellular footprints that are enduring COVID with their families. And so to all of you who are here who are listening, please stay safe, and we look forward to our 2023 Annual Meeting. Thank you.