TDS income plunges, operating revenue up

Telephone and Data Systems today reported first-quarter net income of $13.6 million, or 23 cents a share, down from $28.2 million, or 47 cents a share, in the year-ago quarter. Operating revenue for the first quarter was $665.2 million, up 11% from $600.4 million in the comparable period a year ago.

Overall, the company continued to grow, albeit at a slower pace than anticipated because of the soft economy. TDS said its access lines grew 1.9%. On the U.S. Cellular side of the business, the company added 31,000 net customers, which was lower than expected and heavily affected by the loss of 13,000 customers due to one reseller’s bankruptcy.

TDS’ operating cash flow, measured as operating income plus depreciation and amortization expense, increased 10% to $216.4 million from $197.4 million in the first quarter of 2001.

TDS, which provides local service as an incumbent and competitive carrier in clusters throughout the country, has slowly been acquiring a number of smaller ILECs. In February, the company acquired Telecommunication Systems of New Hampshire, a privately held telecommunications company that operates as the Wilton Telephone Company in Wilton, N.H., and Hollis Telephone in Hollis, N.H. The company will continue to look for acquisitions provided they are priced properly and can be clustered with TDS’ other properties, said Dave Wittwer, CFO of TDS Telecom.

“We think there are still potential opportunities out there,” said Wittwer. “We are looking for markets where we think we could leverage our network infrastructure costs.”