TDS assesses its business interests on an ongoing basis with a goal of improving the competitiveness of its operations and maximizing its long-term return on investment. As part of this strategy, TDS reviews attractive opportunities to acquire additional wireless operating markets and wireless spectrum; and telecommunications companies, cable, HMS or other possible businesses. In addition, TDS may seek to divest outright or include in exchanges for other interests those interests that are not strategic to its long-term success.

On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Nextel Corporation (“Sprint”). The Purchase and Sale Agreement provides that U.S. Cellular will transfer customers and certain PCS licensed spectrum to Sprint in U.S. Cellular's Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $480 million in cash at closing, subject to pro-rations of certain assets and liabilities. The Purchase and Sale Agreement also contemplates certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.” The transaction was approved by the FCC in March 2013 and the closing is expected to occur in the second quarter of 2013.

U.S. Cellular will retain other assets and liabilities related to the Divestiture Markets, including network assets, retail stores and related equipment, and other buildings and facilities. The transaction does not affect spectrum licenses held by U.S. Cellular or variable interest entities (“VIEs”) that are not currently used in the operations of the Divestiture Markets. The Purchase and Sale Agreement also contemplates certain other agreements, including customer and network transition services agreements, which will require that U.S. Cellular provide customer, billing and network services to Sprint for a period of up to 24 months after the closing date. Sprint will reimburse U.S. Cellular for providing such services at an amount equal to U.S. Cellular's cost, including applicable overhead allocations. In addition, these agreements will require Sprint to reimburse U.S. Cellular up to $200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees.

Financial impacts of the Divestiture Transaction are classified in the Consolidated Statement of Operations within Operating income. The table below describes the amounts TDS has recognized, and expects to recognize, in the Consolidated Statement of Operations between the date the Purchase and Sale Agreement was signed and the end of the transition services period, as a result of the transaction.


(Dollars in thousands)			Expected Period of Realization/ Incurrence		Projected Range				Cumulative Amount Incurred as of March 31, 2013		Actual Amount Incurred Three Months Ended March 31, 2013
(Gain) loss on sale of business and other exit costs, net
	Proceeds from Sprint
		Purchase price		2013	$	(480,000)	$	(480,000)	$	-	$	-
		Sprint Cost Reimbursement		2013-2014		(150,000)		(200,000)		-		-
	Net assets transferred			2013		150,000		170,000		-		-
	Non-cash charges for the write-off and write-down of property under construction and related assets			2012-2013		11,000		15,000		10,894		222
	Employee related costs including severance, retention and outplacement			2012-2014		16,000		25,000		15,659		3,050
	Contract termination costs			2012-2014		125,000		175,000		2,959		2,900
	Transaction costs			2012-2013		4,000		6,000		2,055		918
		Total (Gain) loss on sale of business and other exit costs, net			$	(324,000)	$	(289,000)	$	31,567	$	7,090

Depreciation, amortization and accretion expense
	Incremental depreciation, amortization and accretion, net of salvage values			2012-2013		175,000		210,000		58,104		38,046

Other Operating expenses
	Non-cash charges for the write-off and write-down of various operating assets and liabilities			2013		-		10,000		-		-
(Increase) decrease in Operating income					$	(149,000)	$	(69,000)	$	89,671	$	45,136

Incremental depreciation, amortization and accretion, net of salvage values represents anticipated amounts to be recorded in the specified time periods as a result of revising the useful life of certain assets and revising the settlement dates of certain asset retirement obligations in conjunction with the Divestiture Transaction. Specifically, for the years indicated, this is estimated depreciation, amortization and accretion recorded on assets and liabilities of the Divestiture Markets after the November 6, 2012 transaction date less depreciation, amortization and accretion that would have been recorded on such assets and liabilities in the normal course, absent the Divestiture Transaction.

		As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:

					Three Months Ended March 31, 2013
(Dollars in thousands)			Balance December 31, 2012		Costs Incurred		Cash Settlements (1)		Non-cash Settlements		Adjustments		Balance March 31, 2013
Accrued compensation
	Employee related costs including severance, retention, outplacement		$	12,305	$	3,050	$	(1,607)	$	-	$	-	$	13,748
Other current liabilities
	Contract termination costs		$	30	$	2,900	$	(784)	$	-	$	-	$	2,146

(1)		Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities on the Consolidated Statement of Cash Flows.

		At March 31, 2013 and December 31, 2012, the following assets and liabilities were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale":

			Licenses		Goodwill		Property, Plant and Equipment		Total Assets Held for Sale		Liabilities Held for Sale (1)
(Dollars in thousands)
March 31, 2013
Divestiture Transaction			$	140,599	$	19,474	$	-	$	160,073	$	18,360

December 31, 2012
Divestiture Transaction			$	140,599	$	19,474	$	-	$	160,073	$	19,594
Bolingbrook Customer Care Center (2)				-		-		3,169		3,169		-
	Total		$	140,599	$	19,474	$	3,169	$	163,242	$	19,594

(1)		Liabilities held for sale primarily consisted of Customer deposits and deferred revenues.
(2)		Effective January 1, 2013, U.S. Cellular transferred its Bolingbrook Customer Care Center operations to an existing third party vendor.

On February 25, 2013, TDS entered into an Asset Purchase Agreement with Baja Broadband, LLC (“Baja”) to acquire substantially all of the assets of Baja for $267.5 million in cash, subject to a working capital adjustment. Baja is a cable company that passes approximately 212,000 households in markets in Colorado, New Mexico, Texas, and Utah and offers video, broadband and voice services. The transaction is subject to governmental regulatory approvals, compliance with the Hart-Scott-Rodino Act and other conditions. Subject to approvals, the transaction is expected to close in the third quarter of 2013.