10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                                    to

Commission file number 001-14157

TELEPHONE AND DATA SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	36-2669023
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (312) 630-1900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Shares, $.01 par value	TDS	New York Stock Exchange
6.625% Senior Notes due 2045	TDI	New York Stock Exchange
6.875% Senior Notes due 2059	TDE	New York Stock Exchange
7.000% Senior Notes due 2060	TDJ	New York Stock Exchange
5.875% Senior Notes due 2061	TDA	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes	☒	No	☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.	Yes	☐	No	☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes	☒	No	☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer	☒	Accelerated filer				☐
Non-accelerated filer	☐	Smaller reporting company				☐
		Emerging growth company				☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.						☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.						☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).			Yes	☐	No	☒

As of June 30, 2020, the aggregate market values of the registrant’s Common Shares and Series A Common Shares held by non-affiliates were approximately $1 billion and less than $1 million, respectively. For purposes hereof, it was assumed that each director, executive officer and holder of 10% or more of any class of voting equity security of Telephone and Data Systems, Inc. (TDS) is an affiliate. The June 30, 2020, closing price of the Common Shares was $19.88 as reported by the New York Stock Exchange. Because trading in the Series A Common Shares is infrequent, the registrant has assumed for purposes hereof that each Series A Common Share has a market value equal to one Common Share because the Series A Common Shares are convertible on a share-for-share basis into Common Shares.

The number of shares outstanding of each of the registrant’s classes of common stock, as of January 31, 2021, is 107,084,600 Common Shares, $.01 par value, and 7,281,200 Series A Common Shares, $.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Those sections or portions of the registrant's 2020 Annual Report to Shareholders (Annual Report), filed as Exhibit 13 hereto, and of the registrant’s Notice of Annual Meeting of Shareholders and Proxy Statement (Proxy Statement) to be filed prior to April 30, 2021, for the 2021 Annual Meeting of Shareholders scheduled to be held May 20, 2021, are herein incorporated by reference into Parts II and III of this report.

Telephone and Data Systems, Inc.

Annual Report on Form 10-K

For the Period Ended December 31, 2020

TABLE OF CONTENTS

Part I			Page No.
	Item 1.	Business	1
	Item 1A.	Risk Factors	9
	Item 1B.	Unresolved Staff Comments	20
	Item 2.	Properties	20
	Item 3.	Legal Proceedings	20
	Item 4.	Mine Safety Disclosures	20
Part II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21
	Item 6.	Selected Financial Data	21
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	21
	Item 8.	Financial Statements and Supplementary Data	21
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	21
	Item 9A.	Controls and Procedures	22
	Item 9B.	Other Information	22
Part III
	Item 10.	Directors, Executive Officers and Corporate Governance	23
	Item 11.	Executive Compensation	23
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	23
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	23
	Item 14.	Principal Accountant Fees and Services	23
Part IV
	Item 15.	Exhibits and Financial Statement Schedules	24
	Item 16.	Form 10-K Summary	30

 

Telephone and Data Systems, Inc. 30 NORTH LASALLE STREET, SUITE 4000, CHICAGO, ILLINOIS 60602 TELEPHONE (312) 603-1900

PART I

Item 1. Business

Telephone and Data Systems, Inc. (TDS) provides high-quality communications services to customers with 5.0 million wireless connections and 1.2 million wireline and cable connections at December 31, 2020. TDS conducts all of its wireless operations through its majority-owned subsidiary, United States Cellular Corporation (UScellular). As of December 31, 2020, TDS owned 82% of the combined total of the outstanding Common Shares and Series A Common Shares of UScellular and controlled 96% of the combined voting power of both classes of UScellular common stock. TDS provides broadband, video and voice services through its wholly-owned subsidiary, TDS Telecommunications LLC (TDS Telecom). TDS Common Shares trade under the ticker symbol “TDS” on the New York Stock Exchange (NYSE). UScellular Common Shares trade on the NYSE under the ticker symbol “USM.”

Under listing standards of the NYSE, TDS is a “controlled company” as such term is defined by the NYSE. TDS is a controlled company because over 50% of the voting power for the election of directors of TDS is held by the trustees of the TDS Voting Trust.

TDS has three business segments: UScellular and TDS Telecom’s Wireline and Cable. TDS operations also include the operations of its wholly-owned hosted and managed services (HMS) subsidiary, which operates under the OneNeck IT Solutions brand, and its wholly-owned printing subsidiary Suttle-Straus, Inc. (Suttle-Straus). HMS' and Suttle-Straus’ financial results were not significant to TDS’ operations. TDS operates entirely in the United States. Additional information about TDS’ segments is incorporated herein by reference from Note 19 — Business Segment Information in TDS’ Annual Report to Shareholders, filed as Exhibit 13 hereto.

The map below highlights TDS’ consolidated areas of operations:

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UScellular OPERATIONS

General

UScellular provides wireless telecommunications services to customers with 5.0 million connections in portions of 21 states collectively representing a total population of 31 million. UScellular operates in one reportable segment, and all of its wireless operating markets are in the United States.

Business Development and Community Focus

UScellular’s strategy is to attract and retain customers through a value proposition comprising a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a community focus.

UScellular operates a regional wireless network. UScellular’s interests in wireless spectrum licenses include both direct interests whereby UScellular is the licensee and investment interests in entities which are licensees; together, these direct and investment interests involve operating and non-operating wireless spectrum licenses covering portions of 30 states and a total population of approximately 51 million at December 31, 2020.

As part of its business development strategy, UScellular may periodically be engaged in negotiations relating to strategic partnerships and/or the acquisition, exchange or disposition of companies, strategic properties, investment interests or wireless spectrum, including through FCC auctions. The FCC conducts auctions through which additional spectrum is made available for the provision of wireless services. Historically, UScellular has participated in certain FCC auctions both directly and indirectly through its limited partnership interests.

UScellular has a longstanding commitment to supporting its local communities through donations and volunteerism. UScellular focuses its Corporate Social Responsibility program on philanthropic investments and volunteer engagement activities on K-12 STEM (Science, Technology, Engineering and Math) to support youth in the communities UScellular serves through exclusive partnerships with organizations such as Boys & Girls Clubs of America and JASON Learning. Since 2015, The Future of Good program has demonstrated UScellular's commitment to the communities that it serves by highlighting and supporting young humanitarians that have taken extraordinary actions to make their communities a better place. In 2020, UScellular began exploring ways to leverage its assets, brand, partnerships, and resources to begin to close the digital divide with a focus on ensuring all youth in its markets have reliable and fast internet access in school and at home.

Customers, Services, Products and Seasonality

Customers. UScellular focuses on consumer, business and government customers located in its operating markets. These customers are served primarily through UScellular’s retail and direct sales channels.

Services. UScellular provides a wide variety of wireless services accessible on a broad range of devices. Customers can obtain wireless services on a postpaid or prepaid basis. A single account may include monthly wireless services for a variety of handsets and connected devices. A postpaid connection represents an individual line of service for a device for which a customer is generally billed one month in advance for a monthly access charge in return for access to and usage of network services. UScellular’s prepaid service enables individuals to obtain services without credit verification by paying for all services in advance. Approximately 90% of retail connections were postpaid connections as of December 31, 2020.

UScellular offers various service plans tailored to the needs of customers. Depending on those needs at a particular time, service plans may include features related to, among other things: unlimited or metered voice and data; high definition video features; the ability to use a device as a Wi-Fi hotspot; and varying data rates depending on the plan and usage on that plan. Service offerings vary from time to time based on customer needs, technology changes and market conditions - and may be provided as standard plans or as part of limited time promotional offers.

UScellular offers advanced wireless solutions to consumers and business and government customers, including a fast-growing and expansive suite of connected Internet of things (IoT) solutions and software applications across the categories of monitor and control (e.g., sensors and cameras), business automation/operations (e.g., e-forms), communication (e.g., enterprise messaging, back-up router for business continuity services), asset management (e.g., navigation system, fleet management), smart water solutions, and custom, bespoke end-to-end IoT solutions et al. Additionally, for first responders, UScellular offers both Wireless Priority Services (WPS) and Quality Priority and Preemption (QPP) options. UScellular intends to continue to further enhance these offerings for customers in 2021 and beyond.

Products. UScellular offers a comprehensive range of devices such as smartphones and other handsets, tablets, wearables, mobile hotspots, routers, and IoT devices. In addition, UScellular also offers a wide range of accessories, including wireless essentials such as cases, screen protectors, chargers, and memory cards as well as an assortment of consumer electronics such as headphones, smart speakers, and home automation and business management solutions (e.g., cameras, video doorbells, networking and monitoring devices). UScellular allows customers to purchase certain devices and accessories on installment plans, allowing for customers to pay over a specified period of time.

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UScellular also offers services that enable customers to replace or repair their devices, including the Device Protection+ program, which provides as soon as next-day delivery of a replacement device for damaged, lost and stolen devices, and AppleCare services for Apple iOS customers. Its Device Protection+ Advanced program also includes local or on-demand repair for eligible devices. In addition, UScellular offers a Trade-In program through which UScellular buys customers' used equipment.

UScellular purchases devices and accessory products from a number of original equipment manufacturers and distributors. UScellular manages relationships with its suppliers to ensure best possible pricing and identifies opportunities for promotional support from its suppliers. UScellular does not own significant product warehousing and distribution infrastructure; rather, it contracts with third party providers for the majority of its product warehousing, distribution and direct customer fulfillment activities. UScellular also contracts with third party providers for services related to its device service programs.

Seasonality. Seasonality in operating expenses may cause operating income to vary from quarter to quarter. UScellular’s operating expenses tend to be higher in the fourth quarter due to increased marketing and promotional activities during the holiday season.

Sales and Distribution Channels

UScellular supports a multi-faceted distribution program, including retail sales, direct sales, telesales, ecommerce, independent agents and third-party national retailers.

Company retail store locations are designed to market wireless services and products to the consumer and small business segments in a setting familiar to these types of customers. Direct sales representatives sell traditional wireless services as well as IoT and machine-to-machine (M2M) products and solutions to medium and large-sized businesses and governmental entities. Additionally, the telesales and ecommerce channels enable customers to purchase services and devices via phone and online, respectively.

UScellular has relationships with exclusive and non-exclusive agents (collectively “agents”), which are independent businesses that obtain customers for UScellular on a commission basis. UScellular provides support and training to its agents to increase customer satisfaction and to ensure a consistent customer experience. UScellular’s agents are generally in the business of selling wireless devices, wireless service plans and other related products.

In order to expand its retail presence, UScellular also maintains relationships with national retailers. National retailers sell prepaid devices, and some also sell postpaid devices.

Competition

The wireless telecommunication industry is highly competitive. UScellular competes directly with several wireless service providers in each of its markets. In general, there are between two and four competitors in each wireless market in which UScellular provides service, excluding resellers and mobile virtual network operators (MVNOs). In its footprint, UScellular competes to varying degrees against each of the national wireless companies: Verizon, AT&T, T-Mobile USA, and an emerging Dish as the fourth national carrier, in addition to smaller regional carriers in specific areas of its footprint. In addition, UScellular competes with other companies that use alternative communication technology and services to provide similar services and products.

Since each of these competitors operates on systems using spectrum licensed by the FCC and has comparable technology and facilities, competition among wireless service providers for customers is principally on the basis of types of services and products, price, size of area covered, network quality, network speed and responsiveness of customer service. Types of services and products include non–wireless related services such as content offerings that are bundled with wireless services.

Technology

Network Technology. Wireless telecommunication systems transmit voice and data signals over networks of radio towers using radio spectrum licensed by the FCC. Access to local, regional, national and worldwide telecommunications networks is provided through system interconnections. A high-quality network, supported by continued investments in that network, is an important factor for UScellular to remain competitive.

UScellular continues to devote efforts to enhance its network capabilities. UScellular has completed its deployment of VoLTE technology. VoLTE technology allows customers to utilize a 4G LTE network for both voice and data services and offers enhanced services such as high definition voice and simultaneous voice and data sessions.

5G technology helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. UScellular's 5G deployment is initially focused on mobility services using its low band spectrum. UScellular has acquired high band spectrum, which it will deploy in the future to further enable the delivery of 5G services. UScellular has launched commercial 5G services in portions of California, Illinois, Iowa, Kansas, Maine, Maryland, Missouri, Nebraska, New Hampshire, North Carolina, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin and will continue to launch in additional areas in the coming years. In addition to the deployment of 5G technology, UScellular is also modernizing its 4G LTE network to further enhance 4G LTE speeds.

Roaming. Inter-carrier roaming agreements are negotiated between wireless operators to enable customers who are in a service area other than the customer’s home service area to use wireless services in that service area. UScellular has entered into 4G LTE and VoLTE roaming agreements with national wireless companies and, as a result, customers have access to these services on a nationwide basis. In addition, UScellular offers a variety of international roaming options. UScellular is pursuing and expects to introduce 5G roaming in 2021.

3

TDS TELECOM OPERATIONS

General

TDS Telecom provides communications services to 1.2 million connections in 32 states. TDS Telecom operates through two reportable segments: Wireline and Cable. TDS Telecom has a common growth strategy across all of its businesses to provide high-speed broadband services bundled with video and voice services. TDS Telecom strives to be the dominant broadband provider in the markets it serves by investing into high-quality networks and providing excellent customer service.

Operations

TDS Telecom operates as an Incumbent Local Exchange Carrier (ILEC) in 25 states and as a Competitive Local Exchange Carrier (CLEC) in Illinois, Michigan, Minnesota, and Wisconsin. Wireline operations are located across nearly 900 rural, suburban, and metropolitan communities within the U.S, with the largest concentrations of customers in the Upper Midwest and the Southeast. TDS Telecom’s cable business leverages its Wireline core competencies in network management and customer focus and operates under two brand names: TDS Cable in Colorado, New Mexico, Texas, and Utah; and BendBroadband in Oregon. On December 31, 2019, TDS Telecom extended its Cable operations into North Carolina through the acquisition of substantially all the assets of MI Connection Communications System, dba Continuum.

TDS Telecom is also investing in a fiber-to-the-home program in new markets to expand its wireline network and drive growth. Regional markets, selected for their favorable growth criteria, have been launched in Central and Southern Wisconsin, and the Pacific Northwest centered around Coeur d'Alene and Meridian, Idaho and Spokane, Washington.

TDS Telecom focuses on broadband as the core component of its service offerings. It believes that both residential and business customers have a strong preference to purchase complementary communications services from a single provider. TDS Telecom’s strategy is to expand its broadband services and to augment that growth by bundling with video and voice services to build customer loyalty. Through investment in plant upgrades and improvements in programming and customer service levels, TDS Telecom intends to strengthen its markets and continue to grow its revenue base.

Through its Wireline markets, TDS Telecom also provides services to wholesale customers, which are primarily interexchange carriers (companies that provide long-distance telephone and data services between local exchange areas) and wireless carriers that compensate TDS Telecom for the use of its facilities to originate and terminate their voice and data transmissions.

Growth Strategy

Both Wireline and Cable share a common growth strategy to provide high-speed broadband services bundled with video entertainment and voice services. TDS Telecom is investing in fiber in new and existing markets to provide broadband speeds of up to 1 Gigabit per second (Gbps) and to expand its footprint.

Increased fiber deployment provides the opportunity to deliver more robust residential and commercial products which drives future growth. Fiber builds in strategically selected locations allow TDS Telecom to target attractive, growing markets to increase its total footprint. TDS Telecom continues to scale up its out-of-territory fiber builds beginning with a trial market in Sun Prairie, Wisconsin in 2017.

Construction is nearly complete in six additional communities around TDS Telecom’s headquarters in Madison, Wisconsin which are a natural extension to Sun Prairie and existing ILEC markets. Eight additional communities create a Central Wisconsin cluster, also adjacent to existing ILEC markets. An anchor market in the Pacific Northwest was established in Coeur d’Alene, Idaho, and recent additions include Meridian, Idaho and Spokane, Washington.

Similarly, in its Cable markets, TDS Telecom is focused on providing high-speed broadband services, offering up to 1 Gbps data speeds utilizing DOCSIS 3.1 network upgrades to its network, and investing in fiber-to-the-home construction in new housing developments in these fast-growing communities.

TDS Telecom may also seek to grow its operations through the acquisition of businesses that support and complement its existing markets or create entirely new clusters of markets where TDS Telecom can succeed. TDS Telecom intends to avoid markets served by other fiber overbuilders or municipalities which have constructed their own networks with fiber to the home.

Technology

TDS Telecom continues to upgrade and enhance its networks by utilizing various technologies to increase levels of performance and provide additional speed and security to increase value for its customers.

In order to provide IP-based services, TDS Telecom has developed and deployed an inter-regional data routing infrastructure using owned and leased fiber capacity which allows it to leverage its 100-gigabit core network. This configuration, along with the continued development of an IP network that interconnects substantially all the existing service territories, provides redundancy and allows for next generation IP service offerings.

4

TDS Telecom utilizes centralized monitoring and management of its core network to reduce costs and improve service reliability. TDS Telecom continues to standardize equipment and processes to increase efficiency in maintaining its network. Network standardization has aided TDS Telecom in operating its 24-hours-a-day/7-days-per-week Network Management Centers, which continuously monitor the network to proactively identify and correct network faults prior to any customer impact.

Wireline operates an integrated, highly reliable network that consists of central office host and remote sites, primarily equipped with digital and IP switches. Fiber optic and copper cable connect the host central offices with remote switches and ultimately with the end customer. Wireline continues to upgrade and expand its telecommunications network to respond to the needs of its customers for greater bandwidth and advanced technologies. The network is transitioning from its legacy circuit-switched network to a highly reliable IP-based broadband network to facilitate the integration of broadband, video and voice services.

Since 2012, Wireline has pursued a plan to deploy fiber-to-the-home technology, which enables significantly greater broadband speeds to selected residential subdivisions and to commercial customers, when the investment is economically justified. Fiber technology is deployed to provide internet speeds of up to 1 Gbps. Fiber-to-the-home technology is also used in all out-of-territory builds. In addition, in non-fiber markets, data speeds are increased using fiber-to-the-node and copper bonding/vectoring technology, providing speeds of 10 to 100 Megabits per second (Mbps).

Cable’s telecommunication systems are designed to transmit broadband, video and voice services using a hybrid fiber-coaxial network that consists of optical fiber transport from a headend facility to nodes where coaxial cable is then used to reach residential and business customers. In certain markets, Cable has an all-fiber network to the home or business. Both of these fiber-rich networks offer substantial bandwidth capacity and, leveraging DOCSIS 3.1 technology, enable Cable to offer robust broadband, video and voice services.

Customers, Services and Products

Residential. TDS Telecom residential customer operations provide high-speed broadband, video and voice services. These services are bundled at competitive prices to encourage cross-selling within the customer base and to attract new customers. Approximately 75% of Wireline and 50% of Cable residential customers have at least two services.

▪Broadband: TDS Telecom offers reliable high-speed internet connections and all-home WI-FI. Fiber technology is being deployed to select markets to provide internet speeds of up to 1 Gbps. In certain non-fiber markets, TDS Telecom is deploying fiber-to-the-node and copper-based vectoring/pair bonding technology to increase data speeds reaching up to 100 Mbps. DOCSIS 3.1 technology is utilized across nearly all Cable markets and offers speeds of up to 1 Gbps. Premium security and support services are available to enhance the customers’ high-speed internet experience.

▪Video: TDS Telecom provides advanced home TV entertainment that includes basic channels and premium programming available in high-definition television combined with a digital video recording (DVR) service. TDS Telecom offers a next-generation video platform called TDS TV+ which enhances the customer experience by combining linear and non-linear programming, adding interfaces to mobile devices, personalized content recommendations, and network-based DVR functionality. TDS TV+ is an integrated cloud television platform that offers video content and features not available on existing TDS platforms. In certain Wireline markets TDS Telecom partners with a satellite TV provider to offer digital television.

▪Voice: Call plans include local and long-distance telephone service, VoIP and enhanced services like Find-Me/Follow-Me, collaboration, instant messaging and more. Many features are bundled with calling plans to give customers the best value.

Commercial. TDS Telecom commercial customer operations provide secure and reliable broadband, IP-based services, and hosted voice and video collaboration services to small- and medium-sized businesses. TDS Telecom's commercial service focus is to lead with broadband bundled with a voice product from a suite of solutions and TDS TV for business.

Wholesale. Wireline’s wholesale market focus is on access revenues, which is the compensation received from the interexchange carriers for carrying data and voice traffic on TDS Telecom’s networks. Federal Connect America Fund (CAF), including A-CAM, and state Universal Service Fund (USF) revenues, which support the cost of providing communication services in underserved high cost areas, are also included in wholesale service revenues.

Marketing, Sales and Distribution Channels and Customer Service

Marketing. TDS Telecom’s marketing plan is focused on acquiring, retaining and growing customer relationships by maintaining a high-quality network, providing outstanding customer service, and offering a comprehensive portfolio of services and products built around customer needs at fair prices with a local focus. TDS Telecom uses door-to-door selling, digital marketing, targeted mailings and mass advertising to market services and products. TDS Telecom differentiates itself from competitors using a hyper-localized sales marketing effort to maximize broadband penetration. This approach utilizes area specific marketing plans and community events combined with a bundling strategy.

Sales and Distribution Channels. TDS Telecom operates and uses sales contact centers, direct sales forces, retail stores, sales agents and an online platform to sell services and products.

Customer Service. TDS Telecom manages customer retention by focusing on outstanding customer service through extensive training of front-line sales and support associates that administer customer-friendly processes.

5

Competition

TDS Telecom faces competition from other cable providers, fiber overbuilders, low-cost voice providers, satellite providers, other wireline and wireless providers. Furthermore, the use of alternative communications services such as text messages, video conferencing, and social networks has reduced the demand for traditional voice services.

Cable companies have developed technological improvements that have allowed them to extend their competitive operations beyond major markets and have enabled them to provide a broader range of data and voice services over their cable networks. Cable companies have aggressively pursued the bundling of internet, video, voice and mobile service at discounted prices to attract customers from traditional telephone companies. In addition, cable companies continue to add value to their internet offerings by increasing speeds at little to no additional cost to the customer. Wireline estimates that 80% of its ILEC service addresses face active competition from cable providers at December 31, 2020. Cable companies are increasingly targeting commercial customers.

Wireless telephone service providers offering feature-rich wireless devices and improved networks, including fixed wireless and the latest 5G technology, constitute a source of voice and emerging broadband competition. A growing segment of customers have chosen to completely forego the use of traditional wireline services and instead rely solely on wireless service for voice communications services. This trend is more pronounced among residential voice connections, where those connections comprise approximately 44% of total residential Wireline connections as of December 31, 2020. However, the majority of these voice connections bundle with other products, reducing the risk of churn. Some small businesses have followed the residential path by choosing wireless service and disconnecting wireline voice service.

Approximately 15% of TDS Telecom's Wireline connections are within CLEC operations using facilities leased from the incumbent carrier. These carriers are continuing to implement technological changes that could impede TDS Telecom's access to facilities used to provide CLEC communications services. In addition, the FCC has issued an order that eliminates the requirements that allow CLECs to access that infrastructure at wholesale rates. To mitigate these risks, TDS Telecom has refocused the business on serving customers who do not require leased facilities.

The strategy of the Cable segment is focused on broadband to capitalize on the data needs of consumers. Cable seeks to be the leading provider of broadband and video services in its targeted markets. From a broadband perspective, Cable competes against the incumbent local telephone providers which primarily offer DSL-based services. Cable offers a superior, higher bandwidth data product using DOCSIS technology. Video competition is primarily from satellite providers and streaming video providers, and on a limited basis, telephone companies that offer video services and compete for broadband and voice customers. Other telecommunications providers, including internet-based VoIP providers, fiber companies and wireless providers may compete directly for both residential and commercial voice and broadband service customers. Changes in consumer behavior or new technologies or both could cause consumers to reduce or cancel their cable video services and instead seek to obtain video on demand over the internet or through new technologies. Cable systems are operated under non-exclusive franchises; therefore, competing cable systems may be built in the same area.

TDS Telecom continues to develop and maintain an efficient cost structure to ensure that it can compete with price-based initiatives from competitors. In addition to price, TDS Telecom competes based on a variety of factors including the reliability of its network, the diversity and range of its product offerings and customer service. In addition, TDS Telecom is selecting to grow in areas where it has determined customers are underserved in terms of these criteria.

6

TDS — REGULATION

TDS’ operations are subject to federal, state and local regulation. Key regulatory considerations are discussed below.

UScellular

The construction, operation and transfer of wireless systems in the United States are regulated to varying degrees by the FCC pursuant to the Communications Act of 1934, as amended (Communications Act). The FCC currently does not require wireless carriers to comply with a number of statutory provisions otherwise applicable to common carriers that provide, originate or terminate interstate or international telecommunications. However, the FCC has enacted regulations governing construction and operation of wireless systems, licensing (including renewal of wireless spectrum licenses) and technical standards for the provision of wireless services under the Communications Act.

Wireless spectrum licenses segmented by geographic areas are granted by the FCC. The completion of acquisitions, involving the transfer of control of all or a portion of a wireless system, requires prior FCC approval. The FCC determines on a case-by-case basis whether an acquisition of wireless spectrum licenses is in the public interest. Wireless spectrum licenses are granted generally for a ten-year term or, in some cases, for a twelve-year or fifteen-year term. The FCC establishes the standards for conducting comparative renewal proceedings between a wireless license holder seeking renewal of its license and challengers filing competing applications. All of UScellular’s wireless spectrum licenses for which it applied for renewal since 1995 have been renewed. UScellular expects to continue to meet the criteria of the FCC’s license renewal process.

As part of its data services, UScellular provides internet access. Such internet access services may be subject to different regulatory requirements than other wireless services.

Although the Communications Act generally pre-empts state and local governments from regulating the entry of, or the rates charged by, wireless carriers, certain state and local governments regulate other terms and conditions of wireless services, including billing, termination of service arrangements, imposition of early termination fees, advertising, network outages, the use of handsets while driving, zoning, land use, privacy, data security and consumer protection. Further, the Federal Aviation Administration also regulates the siting, lighting and construction of transmitter towers and antennae.

TDS Telecom

The FCC generally exercises jurisdiction over all facilities of, and services offered by, TDS Telecom’s ILECs as telecommunications common carriers, to the extent they provide, originate or terminate interstate or international telecommunications. State public utility commissions generally exercise jurisdiction over intrastate telecommunications facilities and services. In addition, the Wireline business is subject to various other state and local laws, including laws relating to privacy, data security and consumer protection.

The Communications Act requires, among other things, that telecommunications common carriers offer interstate services when requested at just and reasonable rates at terms and conditions that are non-discriminatory. Maximum rates for regulated interstate services are prescribed by the FCC. In many states, local rates paid by end user customers and intrastate access charges paid by carriers continue to be subject to state commission approval.

TDS Telecom’s CLEC and out-of-territory fiber operations are subject to similar but reduced regulation compared to ILECs.

As a cable multiple systems operator (MSO), Cable is subject to regulation by the FCC, covering matters such as technical operations, administrative requirements, consumer protection, access by people with disabilities, customer privacy and content. The operation of cable systems requires the MSO to obtain franchises from state or local governmental authorities to occupy public rights of way with network facilities. These franchises typically are nonexclusive and limited in time, contain various conditions and limitations, and provide for the payment of fees to the local authority, determined generally as a standard percentage of revenues.

TDS’ Cable operations also provide interconnected VoIP and broadband services, including internet access, while the Wireline operations use a traditional circuit-switched voice service that is regulated as a telecommunications common carrier service. TDS Telecom also provides interconnected VoIP, which is currently subject to less regulation.

General

Reference is made to Exhibit 13 to this Form 10-K under “Regulatory Matters” for information regarding any significant recent developments and proposals relating to the foregoing regulatory matters.

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HUMAN CAPITAL RESOURCES

TDS had approximately 9,200 full-time and part-time employees as of December 31, 2020. Employee engagement and development is critical to the success of TDS. TDS periodically surveys its employees; those surveys have consistently shown that employees have strong engagement and high overall job satisfaction. TDS offers education assistance, development assignments, and mentoring programs to assist in employee development. Additionally, TDS sponsors various employee resource groups to build small, connected communities within its workforce and promote diverse, inclusive experiences. TDS supports the communities it serves and encourages employees to volunteer and support local organizations and community groups.

TDS — OTHER ITEMS

Company Information

TDS’ website address is www.tdsinc.com. TDS files with, or furnishes to, the Securities and Exchange Commission (SEC) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as various other information. Investors may access, free of charge, through the Investor Relations portion of the website, TDS' annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), as soon as reasonably practical after such material is filed electronically with the SEC. The public may also view electronic filings of TDS by accessing SEC filings at www.sec.gov.

UScellular’s website address is www.uscellular.com. UScellular files with, or furnishes to, the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as various other information. Investors may access, free of charge, through the Investor Relations portion of the website, UScellular’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practical after such material is filed electronically with the SEC. The public may also view electronic filings of UScellular by accessing SEC filings at www.sec.gov.

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Item 1A. Risk Factors

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

SAFE HARBOR CAUTIONARY STATEMENT

This Annual Report on Form 10-K, including exhibits, contains statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities, events or developments that TDS intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include those set forth below under “Risk Factors” in this Form 10-K. Each of the following risks could have a material adverse effect on TDS’ business, financial condition or results of operations. However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document. Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements. TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. The reader should carefully consider the following risk factors and other information contained in, or incorporated by reference into, this Form 10-K to understand the material risks relating to TDS’ business.

Operational Risk Factors

1)Intense competition involving products, services, pricing, and network speed and technologies could adversely affect TDS’ revenues or increase its costs to compete.

Competition in the wireless industry is intense and is expected to intensify in the future due to multiple factors such as increasing market penetration, introduction of new products, new competitors and changing prices. There is competition in service plan pricing; handsets and other devices; network quality, coverage, speed and technologies, including 5G technology; distribution; new entrants; bundled services and products, such as content; and other categories. In particular, wireless competition includes aggressive service plan and device pricing, including pricing for unlimited plans, which could result in switching activity and churn and limit TDS’ ability to monetize future growth in data usage. In addition, competition based on network speed may increase as customer demand for higher speeds increases. TDS anticipates that these competitive factors may cause the prices for services and products to decline and the costs to compete to increase.

TDS’ primary wireless competitors are national or global telecommunications companies that are larger than TDS, possess greater financial and other resources, possess more extensive coverage areas and more spectrum within their coverage areas, and market other services with their communications services that TDS does not offer. TDS and its competitors are actively marketing their deployment of 5G and, as a result, are raising consumer awareness of the technology. If TDS cannot keep pace with its competitors in deploying 5G or other comparable offerings, or if TDS' deployment of 5G technology does not result in significant incremental revenues, TDS' financial condition, results of operations or ability to do business could be adversely affected. In addition, new technologies, services and products that are more commercially effective than the technologies, services and products offered by TDS may be developed and create new sources of competition. Further, new technologies may be proprietary such that TDS is not able to adopt such technologies. There can be no assurance that TDS will be able to compete successfully in this environment.

Sources of competition to TDS’ wireless business typically include two to four competing wireless telecommunications service providers in each market, wireline telecommunications service providers, cable companies, resellers (including MVNOs), and providers of alternative telecommunications services. Many of TDS’ wireless competitors and other competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than TDS.

Sources of competition to TDS’ Wireline and Cable businesses include, but are not limited to, resellers of local exchange services, interexchange carriers, incumbent carriers, satellite broadband providers, wireless communications providers, other cable companies, access providers, fiber overbuilders, VoIP providers and providers using other emerging technologies.

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Some of the specific risks presented by certain Wireline and Cable competitors include:

▪Cable companies - in Wireline markets that continue deployment of broadband technologies such as DOCSIS 3.1 and their further evolution that substantially increase broadband speeds, and offering these speeds to customers at relatively low prices, including speed upgrades for no additional charge, competition for video services, and bundling of wireless services.

▪Incumbent carriers - in Cable and out-of-territory markets that primarily offer traditional wireline voice connections, DSL-based services, and may also offer other premium and enhanced data services as well as large price cap regulated companies given their full suite of services, experience and strong financial resources.

▪Wireless - the trend of customers “substituting” their wireline voice connection with a wireless device and voice service continues and/or an emerging segment of customers substitute their wired broadband connection with a wireless connection.

▪VoIP providers - are able to offer voice service at a very low price point.

▪Fiber overbuilders - municipalities, neighboring ILECs, or other providers offering the same or higher data speeds at similar or lower price points.

▪Other providers - competition to cable, IPTV and broadband from broadcast television, satellite providers, streaming video services and wireline providers which have begun to upgrade their networks to provide video services in addition to voice and high-speed internet access services.

2)Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS’ revenues include roaming revenues related to the use of TDS’ network by other wireless carriers’ customers who travel within TDS’ coverage areas. Changes in FCC rules or actions, industry practices or the network footprints of carriers due to mergers, acquisitions or network expansions could have an adverse effect on TDS’ roaming revenues. For example, consolidation among other carriers which have network footprints that currently overlap TDS’ network could decrease the amount of roaming revenues for TDS.

Similarly, TDS’ wireless customers can access another carrier’s network automatically only if the other carrier allows TDS’ customers to roam on its network. TDS relies on roaming agreements with other carriers to provide roaming capability to its customers in areas of the U.S. and internationally outside of its service areas and to improve coverage within selected areas of TDS’ network footprint. Although TDS has entered into roaming agreements with national carriers, there is no assurance that TDS will be able to maintain these agreements and/or enter into new agreements with other carriers to provide roaming services or that it will be able to do so on reasonable or cost-effective terms.

Some competitors may be able to obtain lower roaming rates than TDS is able to obtain because they have larger data usage or call volumes or may be able to reduce roaming charges by providing service principally over their own networks. In addition, the quality and availability of services that a wireless carrier delivers to a TDS customer while roaming may be inferior or limited in comparison to the service TDS provides. TDS’ rate of adoption of new technologies, such as those enabling high-speed data and voice services, could affect its ability to enter into or maintain roaming agreements with other carriers. In addition, TDS’ wireless technology may not be compatible with technologies used by other carriers, which may limit the ability of TDS to enter into voice or data roaming agreements with such other carriers. Carriers whose customers roam on TDS’ network could switch their business to new operators, limit their high-speed usage or, over time, move traffic to their own networks. Changes in roaming usage patterns, rates for roaming usage, or roaming relationships with other carriers could have an adverse effect on TDS’ roaming revenues and/or expenses.

To the extent that other carriers expand their networks in TDS’ service areas, the roaming arrangements between TDS and these other carriers could become less strategic for them. That is, these other carriers will have fewer or less extensive geographic areas where roaming services are required by their customers and, as a result, the roaming arrangements could become less critical to serving their customer base. This presents a risk to TDS in that, to the extent TDS is not able to enter into economically viable roaming arrangements with these other carriers, this could impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network.

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3)A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS’ wireless business depends on the ability to use portions of the radio spectrum licensed by the FCC. TDS could fail to obtain access to sufficient spectrum capacity, including spectrum needed to support 5G technology, in new or existing markets, whether through FCC auctions or other transactions, in order to meet the anticipated spectrum requirements associated with increased demand for existing services, especially increases in customer demand for data services and network speed, and to enable deployment of next-generation services. TDS believes that this increased demand for data services and network speed reflects a trend that will continue for the foreseeable future. Data usage, including usage under unlimited plans, could exceed current forecasts resulting in a need for increased investment in spectrum or other network components. TDS could fail to accurately forecast its future spectrum requirements considering changes in plan offerings, customer usage patterns, technology requirements and the expanded demands of new services. Such a failure could have an adverse impact on the quality of TDS’ services or TDS’ ability to roll out such future services in some markets, or could require that TDS curtail existing services in order to make spectrum available for next-generation services. Spectrum constrained providers could be effectively capped in increasing market share. As spectrum constrained providers gain customers, they use up their network capacity. Since they lack spectrum, they can respond to demand only by adding cell sites, which is capital intensive, adds fixed operating costs, is limited by zoning considerations, and ultimately may not be cost effective. Further, a spectrum constrained provider will generally not be able to achieve the data speeds that other competitors with more spectrum are able to provide.

TDS may acquire access to spectrum through a number of alternatives, including acquisitions, exchanges and participation in spectrum auctions. TDS may participate in spectrum auctions conducted by the FCC in the future. As required by law, the FCC has conducted auctions for wireless spectrum licenses to use some parts of the radio spectrum. The decision to conduct auctions, and the determination of what spectrum frequencies will be made available for auction and the determination of geographic size of wireless spectrum licenses, are made by the FCC pursuant to laws that it administers. The FCC may not be able to allocate spectrum sufficient to meet the demands of all those wishing to obtain wireless spectrum licenses for new market entry or to expand their spectrum holdings to meet the expanding demand for data services or to address other spectrum constraints. Due to factors such as geographic size of wireless spectrum licenses and auction bidders that may raise prices beyond acceptable levels, TDS may not be successful in FCC auctions in obtaining access to the spectrum that it believes is necessary to implement its business and technology strategies.

In addition, newly auctioned spectrum may not be compatible with existing spectrum, and vendors may not create suitable products to use such spectrum. Further, access to wireless spectrum licenses won in FCC auctions may not be available on a timely basis. Such access is dependent upon the FCC actually granting wireless spectrum licenses won, which can be delayed for various reasons. Furthermore, newly licensed spectrum may not be available for immediate use since the radio operations of incumbent users, including in some cases government agencies, may need to be relocated to other portions of the radio spectrum, and/or the newly licensed spectrum may be subject to sharing and coordination obligations. TDS also may seek to acquire radio spectrum through purchases and exchanges with other spectrum licensees. However, TDS may not be able to acquire sufficient spectrum through these types of transactions, and TDS may not be able to complete any of these transactions on favorable terms.

4)An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.

TDS’ businesses are highly technical and competition for skilled talent in the telecommunications industry is intense. Due to competition and/or limited supply for qualified management, technical, sales and other personnel, there can be no assurance that TDS will be able to continue to attract and/or retain people of outstanding potential for the development of its business. The loss of the services of existing key personnel due to competition and/or retirements as well as the failure to recruit additional qualified personnel in a timely manner could have an adverse effect on TDS’ business, financial condition or results of operations.

The market for highly skilled leaders in the telecommunications industry also is extremely competitive. The future success of TDS and its businesses depends in substantial part on TDS’ ability to recruit, hire, motivate, develop, and retain talented and highly skilled leaders for all areas of its organization. The loss of any of TDS’ key leaders could have an adverse effect on its business, financial condition or results of operations. Effective succession planning is also important to TDS’ long-term success. Failure to ensure effective transfer of knowledge and smooth transition involving key employees could also adversely affect TDS’ business, financial condition and results of operations.

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5)TDS’ smaller scale relative to larger competitors that may have greater financial and other resources than TDS could cause TDS to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations.

There has been a trend in the telecommunications and related industries towards consolidation of service providers through acquisitions, reorganizations and joint ventures. This trend could continue, leading to larger competitors over time. TDS has smaller scale efficiencies compared to larger competitors. TDS may be unable to compete successfully with larger companies that have substantially greater financial, technical, marketing, sales, purchasing and distribution resources or that offer more services than TDS, which could adversely affect TDS’ revenues and costs of doing business. Specifically, TDS’ smaller scale relative to most of its competitors could have the following impacts, among others:

▪Low profit margins and returns on investment that are below TDS’ cost of capital;

▪Increased operating costs due to lack of leverage with vendors;

▪Inability to successfully deploy 5G or other wireless technologies, or to realize significant incremental revenues from their deployment;

▪Limited opportunities for strategic partnerships as potential partners are focused on wireless, wireline and cable companies with greater scale and scope;

▪Limited access to content, as well as limited ability to obtain acceptably priced content and programming;

▪Consumer expectations that TDS provides lower-priced wireless offerings relative to larger competitors;

▪Limited ability to influence industry standards;

▪Reduced ability to invest in research and development of new services and products;

▪Lower risk tolerance when evaluating new markets;

▪Vendors may deem TDS non-strategic and not develop or sell services and products to TDS, particularly where technical requirements differ from those of larger companies;

▪Limited access to intellectual property; and

▪Other limited opportunities such as for software development or third-party distribution.

TDS’ businesses depend on access to content for data and access to new wireless devices being developed by vendors. TDS’ ability to obtain such access depends in part on other parties. If TDS is unable to obtain timely access to new content or wireless devices being developed by vendors, its business, financial condition or results of operations could be adversely affected.

6)Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations.

Changes in any of several factors could have an adverse effect on TDS’ business, financial condition or results of operations. These factors include, but are not limited to:

▪Demand for or usage of services, particularly data services;

▪Consumer preferences, including internet speed and type of wireless devices;

▪Consumer perceptions of network quality and performance;

▪Consumer expectations for self-service options through digital means;

▪Competitive pressure to deliver higher speed;

▪The pricing of services, including an increase in price-based competition;

▪Access to and cost of programming;

▪The overall size and growth rate of TDS’ customer base;

▪Penetration rates;

▪Churn rates;

▪Selling expenses;

▪Net customer acquisition and retention costs;

▪Customers’ ability to pay for services and the potential impact on bad debts expense;

▪Roaming agreements and rates;

▪Third-party vendor support;

▪Capacity constraints;

▪The mix of services and products offered by TDS and purchased by customers; and

▪The costs of providing services and products.

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7)Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.

The telecommunications industry is experiencing significant changes in technologies and services expected by customers, as evidenced by evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new services and products, and enhancements and changes in end-user requirements and preferences. Also, high-speed wireless networks (wireless broadband) represent a product offering and opportunity for TDS’ wireless business, but also represent a risk for TDS’ Wireline and Cable businesses as customers may elect to substitute their wireline or cable broadband connection with wireless broadband. Further, fixed-mobile convergence services that combine wireline broadband services with mobile services represent a competitive threat. If the trend toward convergence continues, TDS is at a competitive disadvantage to larger competitors, including the national wireless carriers and other potential large new entrants with much greater financial and other resources in adapting to such convergence. Future technological changes or advancements may enable other technologies to equal or exceed TDS’ current levels of service and render its system infrastructure obsolete. TDS may not be able to respond to such changes and implement new technology on a timely or cost-effective basis, which could reduce its revenues or increase its costs of doing business.

8)Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects.

TDS' wireless business has begun to deploy 5G technology in its network and has launched commercial 5G services in selected markets. The continued deployment of 5G technology will require substantial investments in TDS' wireless networks to remain competitive in the industry. Transition to 5G or other new technologies involves significant time, cost and risk, and anticipated products and revenues may not be realized. Furthermore, the wireless business experiences rapid technology changes and new services and products. If TDS fails to effectively deploy new wireless technologies, services or products on a timely basis, this could have an adverse impact on TDS’ business, financial condition and results of operations.

TDS’ Wireline business is deploying fiber-to-the-home technology, advanced wireline, broadband, and TDS TV+ services through fiber-to-the-node, copper bonding and vectoring technology. A significant amount of the product development and integration risks are borne by TDS. Further, the simultaneous rollout of these advanced services and technologies increases the execution risk. If TDS fails to effectively deploy new technologies and products on a timely basis or if conditions occur that limit interpersonal sales efforts, this could have an adverse impact on TDS’ business, financial condition and results of operations.

Cable’s business is also subject to complexities associated with deploying new technologies, such as DOCSIS 3.1 and TDS TV+ services, and involves substantial risk, including rapid technology changes.

Furthermore, it is not certain that TDS’ investments in various new, unproven technologies and the related service and product offerings will be effective. The markets for some of these services, products and solutions may still be emerging and the overall potential for these markets, including revenues to be realized, may be uncertain. If customer demand for these new services, products and solutions does not develop as expected, TDS’ business, financial condition or results of operations could be adversely affected.

9)Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.

As part of TDS’ operating strategy, TDS from time to time may be engaged in the acquisition, divestiture or exchange of companies, businesses, strategic properties, wireless spectrum or other assets. TDS may change the markets in which it operates and the services that it provides through such acquisitions, divestitures and/or exchanges. In general, TDS may not disclose the negotiation of such transactions until a definitive agreement has been reached. These transactions commonly involve a number of risks, including:

▪Identification of attractive companies, businesses, properties, spectrum or other assets for acquisition or exchange, and/or the selection of TDS’ businesses or assets for divestiture or exchange;

▪Competition for acquisition targets and the ability to acquire or exchange businesses at reasonable prices;

▪Inability to make acquisitions that would achieve sufficient scale to be competitive with competitors with greater scale;

▪Possible lack of buyers for businesses or assets that TDS desires to divest and the ability to divest or exchange such businesses or assets at reasonable prices;

▪Ability to negotiate favorable terms and conditions for acquisitions, divestitures and exchanges;

▪Significant expenditures associated with acquisitions, divestitures and exchanges;

▪Risks associated with integrating new businesses or markets, including risks relating to cybersecurity and privacy;

▪Ability to enter markets in which TDS has limited or no direct prior experience and competitors have stronger positions;

▪Ability to integrate and manage TDS’ different business operations and services, including wireless services, traditional wireline services and cable businesses;

▪Uncertain revenues and expenses associated with acquisitions or the entry into new out-of-territory markets, with the result that TDS may not realize the growth in revenues, anticipated cost structure, profitability, or return on investment that it expects;

▪Difficulty of integrating the technologies, services, products, operations and personnel of the acquired businesses, or of separating such matters for divested businesses or assets;

▪Diversion of management’s attention;

▪Disruption of ongoing business;

▪Impact on TDS’ cash and available credit lines for use in financing future growth and working capital needs;

▪Inability to retain key personnel;

▪Inability to successfully incorporate acquired assets and rights into TDS’ service offerings;

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▪Inability to maintain uniform standards, controls, procedures and policies;

▪Possible conditions to approval by the FCC, the Federal Trade Commission and/or the Department of Justice; and

▪Impairment of relationships with employees, customers or vendors.

No assurance can be given that TDS will be successful with respect to its acquisition, divestiture or exchange strategies or initiatives.

10)A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations.

TDS’ business plan includes significant construction activities and enhancements to its network, support and other systems and infrastructure. Additionally, the deployment of new wireless technologies, including 5G, may require substantial investments in TDS' wireless network. As TDS deploys, expands and enhances its wireless network, it may need to acquire additional spectrum. Also, as TDS continues to build out and enhance its network, TDS must, among other things, continue to:

▪Lease, acquire or otherwise obtain rights to cell and switch sites, transport facilities or other facilities;

▪Obtain zoning variances or other local governmental or third-party approvals or permits for network construction;

▪Complete and update the radio frequency design, including cell site design, frequency planning and network optimization, for each of TDS’ wireless markets; and

▪Improve, expand and maintain customer care, network management, billing and other financial and management systems.

Any difficulties encountered in completing these activities, as well as problems in vendor equipment availability, technical resources, system performance or system adequacy, could delay implementation and deployment of new technologies, delay expansion of operations and product capabilities in new or existing markets or result in increased costs. Failure to successfully deploy new technologies, including 5G, and/or build-out and enhance TDS’ network, support facilities and other systems and infrastructure in a cost-effective manner, and in a manner that satisfies consumers' expectations, could have an adverse effect on TDS’ business, business prospects, financial condition or results of operations.

TDS’ Wireline and Cable businesses are devoting an increasing amount of capital for fiber overbuilds and out of territory construction. TDS is often reliant on third parties for items such as franchises, utility easements, aerial attachments and other permits. Difficulties in gaining acceptance from new market communities could cause delays or additional costs. Any difficulties in scaling up project management, engineering and construction resources could delay construction and expansion of operations in new or existing markets or result in increased costs. Failure to gain acceptance in new communities and successfully scale up resources could have an adverse effect on TDS’ business, business prospects, financial condition or results of operations.

11)Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties of key suppliers or independent agents and third party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations.

TDS has relationships with independent agents and third-party national retailers who market TDS’ services.

TDS depends upon certain vendors to provide it with equipment (including wireless devices), services and content that meet its quality and cost requirements on a timely basis to continue its network construction and upgrades, and to operate its business. TDS does not have operational or financial control over such key suppliers and has limited influence with respect to the manner in which these key suppliers conduct their businesses. If these key suppliers (i) experience financial difficulties or file for bankruptcy or experience other operational difficulties or (ii) deem TDS non-strategic and not develop or sell services and products to TDS, particularly where technical requirements differ from those of larger companies, they may not provide equipment, services or content to TDS on a timely basis, or at all, or they may otherwise fail to honor their obligations to TDS. Furthermore, consolidation among key suppliers may result in less competition and higher prices or the discontinuation of support for equipment owned by TDS.

Operation of TDS’ supply chain and management of its inventory require accurate forecasting of customer growth and demand. If overall demand for devices and equipment or the mix of demand for devices and equipment is significantly different than TDS’ expectations, TDS could face inadequate or excess supplies of particular models of devices and equipment. This could result in lost sales opportunities or an excess supply of inventory. Further, TDS' supply chain could be disrupted unexpectedly by raw material shortages, wars, natural disasters, disease or other factors.

Also, TDS has other arrangements with third parties, including arrangements pursuant to which TDS outsources certain support functions to third-party vendors. Operational problems associated with such functions, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, including possible cyber-attacks or other breaches of network or information technology security or privacy, could have adverse effects on TDS’ business, financial condition or results of operations.

12)A failure by TDS to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS relies extensively on its telecommunication networks and information technology to operate and manage its businesses, process transactions and summarize and report results. These networks and technology are subject to obsolescence and, consequently, must be upgraded, replaced and/or otherwise enhanced over time. Enhancements must be more flexible and dependable than ever before. All of this is capital intensive and challenging.

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The increased provision of data services, including IPTV, has introduced significant new demands on TDS’ network and also has increased complexities related to network management. As it relates to Wireline’s networks, the transition to IP-based networks from well-established time-division multiplexing networks requires new support tools and technician skills. Further, this transition requires the use of more leased facilities and partnerships which require enhanced network monitoring and controls. The IP-based networks also generally require more electronics on customers’ premises which introduces more technical risks and makes diagnostics and repairs more difficult.

Further, the increased provision of data services on TDS’ networks has created an increased level of risk related to quality of service. This is due to the fact that many customers increasingly rely on data communications to execute and validate transactions. As a result, redundancy and geographical diversity of TDS’ network facilities are critical to providing uninterrupted service. Also, the speed of repair and maintenance procedures in the event of network interruptions is critical to maintaining customer satisfaction. TDS’ ability to maintain high-quality, uninterrupted service to its customers is critical, particularly given the increasingly competitive environment and customers’ ability to choose other service providers.

In addition, TDS’ networks and information technology and the networks and information technology of vendors on which TDS relies are subject to damage or interruption due to various events, including power outages, computer, network and telecommunications failures, computer viruses, security breaches, hackers and other cyber security risks, catastrophic events, natural disasters, errors or unauthorized actions by employees and vendors, flawed conversion of systems, disruptive technologies and technology changes.

Financial Risk Factors

13)Uncertainty in TDS’ future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, other changes in TDS’ performance or market conditions, changes in TDS’ credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, and/or reduce or cease share repurchases and/or the payment of dividends.

TDS and its subsidiaries operate capital-intensive businesses. Historically, TDS has used internally-generated funds and also has obtained substantial funds from external sources for general corporate purposes. In the past, TDS’ existing cash and investment balances, funds available under its revolving credit and receivables securitization agreements, funds from other financing sources, including term loans and other long-term debt, and cash flows from operating and certain investing and financing activities, including sales of assets or businesses, provided sufficient liquidity and financial flexibility for TDS to meet its normal day-to-day operating needs and debt service requirements, to finance the build-out and enhancement of markets and to fund acquisitions. There is no assurance that this will be the case in the future. It may be necessary from time to time to increase the amount of permissible borrowings under the existing revolving credit and receivables securitization agreements, to put in place new credit agreements, or to obtain other forms of financing in order to fund potential expenditures. TDS’ liquidity would be adversely affected if, among other things, TDS is unable to obtain short or long-term financing on acceptable terms, TDS makes significant spectrum license purchases, TDS makes significant capital investments, TDS makes significant business acquisitions, the Los Angeles SMSA Limited Partnership (LA Partnership) discontinues or significantly reduces distributions compared to historical levels, or Federal USF and/or other regulatory support payments decline.

TDS’ credit rating currently is sub-investment grade. TDS has incurred negative free cash flow (defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment) at times in the past and this could occur in the future. TDS may require substantial additional capital for, among other uses, funding day-to-day operating needs including working capital, acquisitions of providers of cable, wireless or wireline telecommunications services, or other businesses, spectrum license or system acquisitions, capital expenditures, debt service requirements, the repurchase of shares, the payment of dividends, or making additional investments. There can be no assurance that sufficient funds will continue to be available to TDS or its subsidiaries on terms or at prices acceptable to TDS. Insufficient cash flows from operating activities, changes in TDS' credit ratings, defaults of the terms of debt or credit agreements, uncertainty of access to capital, deterioration in the capital markets, reduced regulatory capital at banks which in turn limits their ability to borrow and lend, other changes in the performance of TDS or in market conditions or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its acquisition, capital expenditure and business development programs, reduce the acquisition of wireless spectrum licenses, reduce or cease share repurchases and/or the payment of dividends. TDS cannot provide assurance that circumstances that could have a material adverse effect on its liquidity or capital resources will not occur.

14)TDS has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.

TDS has a significant amount of indebtedness and may need to incur additional indebtedness. TDS’ level of indebtedness could have important consequences. For example, it (i) may limit TDS’ ability to obtain additional financing for working capital, capital expenditures or general corporate purposes, particularly if the ratings assigned to its debt securities by rating organizations are revised downward; (ii) will require TDS to dedicate a substantial portion of its cash flow from operations to the payment of interest and principal on its debt, thereby reducing the funds available to TDS for other purposes including expansion through acquisitions, capital expenditures, marketing spending and expansion of its business; and (iii) may limit TDS’ flexibility to adjust to changing business and market conditions and make TDS more vulnerable to a downturn in general economic conditions as compared to TDS’ competitors. TDS’ ability to make scheduled payments on its indebtedness or to refinance it will depend on its financial and operating performance which, in turn, is subject to prevailing economic and competitive conditions and other factors beyond its control. In addition, TDS’ leverage may put it at a competitive disadvantage to some of its competitors that are not as leveraged.

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The TDS and UScellular revolving credit agreements, the TDS and UScellular term loan agreements and the UScellular receivables securitization agreement require TDS or UScellular, as applicable, to comply with certain affirmative and negative covenants, including certain financial covenants. Depending on the actual financial performance of TDS and UScellular, there is a risk that TDS and/or UScellular could fail to satisfy the required financial covenants. If TDS or UScellular breach a financial or other covenant of any of these agreements, it would result in a default under that agreement, and could involve a cross-default under other debt instruments. This could in turn cause the affected lenders to accelerate the repayment of principal and accrued interest on any outstanding debt under such agreements and, if they choose, terminate the agreement. If appropriate, TDS and UScellular may request the applicable lenders for an amendment of financial covenants in the TDS and/or UScellular agreements, in order to provide additional financial flexibility to TDS and UScellular, and may also seek other changes to such agreements. There is no assurance that the lenders will agree to any amendments. If the lenders agree to amendments, this may result in additional payments or higher interest rates payable to the lenders and/or additional restrictions. Restrictions in such debt instruments may limit TDS’ operating and financial flexibility.

As a result, TDS’ level of indebtedness, restrictions contained in debt instruments and/or possible breaches of covenants, defaults, and acceleration of indebtedness could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows.

15)TDS’ assets and revenue are concentrated primarily in the U.S. telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry.

The U.S. telecommunications industry is facing significant change and an uncertain operating environment. TDS’ focus on the U.S. telecommunications industry, together with its positioning relative to larger competitors with greater resources within the industry, may represent increased risk for investors due to the lack of diversification. This could have an adverse effect on TDS’ ability to attain and sustain long-term, profitable revenue growth and could have an adverse effect on its business, financial condition or results of operations.

16)TDS has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on TDS’ financial condition or results of operations.

TDS has significant investments in entities that it does not control, including equity investments and interests in certain variable interest entities. TDS’ interests in such entities do not provide TDS with control over the business strategy, financial goals, network build-out plans or other operational aspects of these entities. TDS cannot provide assurance that these entities will operate in a manner that will increase or maintain the value of TDS’ investments, that TDS’ proportionate share of income from these investments will continue at the current level in the future or that TDS will not incur losses from the holding of such investments. Losses in the values of such investments or a reduction in income from these investments could adversely affect TDS’ financial condition or results of operations. In addition, certain investments have historically contributed significant cash flows to TDS and a reduction or suspension of such cash flows could adversely affect TDS’ financial condition.

Regulatory, Legal and Governance Risk Factors

17)Failure by TDS to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect TDS’ business, financial condition or results of operations.

TDS’ operations are subject to varying degrees of regulation by the FCC, state public utility commissions and other federal, state and local regulatory agencies and legislative bodies. Changes in the administration of the various regulatory agencies and legislative bodies could result in different policies with respect to many federal laws and regulations, including but not limited to changes to fiscal and tax policies, trade policies and tariffs on import goods. New or amended regulatory requirements could increase TDS’ costs and divert resources from other initiatives. Adverse decisions, increased regulation, or changes to existing regulation by regulatory bodies could negatively impact TDS’ operations by, among other things, permitting greater competition or limiting TDS’ ability to engage in certain sales or marketing activities, or retention and recruitment of skilled resources. New regulatory mandates or enforcement may require unexpected or increased capital expenditures, lost revenues, higher operating expenses or other changes. Court decisions and rulemakings could have a substantial impact on TDS’ operations, including rulemakings on broadband access to the internet, intercarrier access compensation, state and federal support funding, and treatment of VoIP traffic or unbundled network elements. Litigation and different objectives among federal and state regulators could create uncertainty and delay TDS’ ability to respond to new regulations. Further, wireless spectrum licenses are subject to renewal by the FCC and could be revoked in the event of a violation of applicable laws or regulatory requirements. Also, although FCC rules relating to net neutrality have been repealed, the new administration may seek to reinstate net neutrality in some form and some state legislators and regulators are seeking to or have already enacted state net neutrality laws and regulations. Interpretation and application of these rules, including conflicts between federal and state laws, may result in additional costs for compliance and may limit opportunities to derive profits from certain business practices or resources. For additional information related to TDS’ regulatory environment, see Risk Factor Number 19 below and “Regulatory Matters” in Exhibit 13 to this Form 10-K.

TDS attempts to timely and fully comply with all regulatory requirements. However, TDS is unable to predict the future actions of the various legislative and regulatory bodies that govern TDS, but such actions could have adverse effects on TDS’ business.

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18)TDS receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on TDS’ business, financial condition or results of operations.

Telecommunications companies may be designated by states, or in some cases by the FCC, as an Eligible Telecommunications Carrier (ETC) to receive universal service support payments if they provide specified services in “high cost” areas. UScellular has been designated as an ETC in certain states and received $92 million in high cost support for service to high cost areas in 2020. TDS Telecom also received support under the Connect America Fund support program. The A-CAM program has build-out requirements that if not met, would result in penalties and loss of support. In 2020, TDS Telecom received $114 million under all federal regulatory support programs. There is no assurance that regulatory support payments will continue. If regulatory support is discontinued or reduced from current levels, or if receipt of future regulatory support is contingent upon making certain network-related expenditures, this could have an adverse effect on TDS’ business, financial condition or operating results. For additional information related to TDS’ regulatory environment, see “Regulatory Matters” in Exhibit 13 to this Form 10-K.

Telecommunications providers pay a variety of surcharges and fees on their gross revenues from interstate and intrastate services, including USF fees and common carrier regulatory fees. The division of services between interstate services and intrastate services, including the divisions associated with Federal USF fees, is a matter of interpretation and in the future may be contested by the FCC or state authorities. The FCC in the future also may change the basis on which Federal USF fees are charged. The Federal government and many states also apply transaction-based taxes to sales of telecommunications services and products and to purchases of telecommunications services from various carriers. In addition, state regulators and local governments have imposed and may continue to impose various surcharges, taxes and fees on telecommunications services. The applicability of these surcharges and fees to TDS’ services is uncertain in many cases and jurisdictions may contest whether TDS has assessed and remitted those monies correctly. Periodically, state and federal regulators may increase or change the surcharges and fees TDS currently pays. In some instances, TDS passes through these charges to its customers. However, Congress, the FCC, state regulatory agencies or state legislatures may limit the ability to pass through transaction-based tax liabilities, regulatory surcharges and regulatory fees imposed on TDS to customers. TDS may or may not be able to recover some or all of those taxes from its customers and the amount of taxes may deter demand for its services or increase its cost to provide service.

19)Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS is regularly involved in a number of legal and policy proceedings before the FCC and various state and federal courts. Such legal and policy proceedings can be complex, costly, protracted and highly disruptive to business operations by diverting the attention and energies of management and other key personnel.

The assessment of legal and policy proceedings is a highly subjective process that requires judgments about future events. Additionally, amounts ultimately received or paid upon settlement or resolution of litigation and other contingencies may differ materially from amounts accrued in the financial statements. Depending on a range of factors, these or similar proceedings could impose restraints on TDS’ current or future manner of doing business.

20)The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on TDS’ wireless business, financial condition or results of operations.

Media reports and certain professional studies have suggested that certain radio frequency emissions from wireless devices may be linked to various health problems, including cancer or tumors, and may interfere with various electronic medical devices, including hearing aids and pacemakers. TDS is a party to and may in the future be a party to lawsuits against wireless carriers and other parties claiming damages for alleged health effects, including cancer or tumors, arising from wireless phones or radio frequency transmitters. Concerns over radio frequency emissions may discourage use of wireless devices or expose TDS to potential litigation. In addition, the FCC or other regulatory authorities may adopt regulations in response to concerns about radio frequency emissions. Any resulting decrease in demand for wireless services, costs of litigation and damage awards or regulation could have an adverse effect on TDS’ business, financial condition or results of operations.

In addition, some studies have indicated that some aspects of using a wireless device while driving may impair a driver's attention in certain circumstances, making accidents more likely. These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries.

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21)Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS faces possible effects of industry litigation relating to patents, other intellectual property or otherwise, that may restrict TDS’ access to devices or network equipment critical to providing services to customers. If technology that TDS uses in products or services were determined by a court to infringe a patent or other intellectual property right held by another person, TDS could be precluded from using that technology and could be required to pay significant monetary damages. TDS also may be required to pay significant royalties to such person to continue to use such technology in the future. The successful enforcement of any intellectual property rights, or TDS’ inability to negotiate a license for such rights on acceptable terms, could force TDS to cease using the relevant technology and offering services incorporating the technology. Any litigation to determine the validity of claims that TDS’ products or services infringe or may infringe intellectual property rights of another, regardless of their merit or resolution, could be costly and divert the effort and attention of TDS’ management and technical personnel. Regardless of the merits of any specific claim, TDS cannot give assurance that it would prevail in litigation because of the complex technical issues and inherent uncertainties in intellectual property litigation. Although TDS generally seeks to obtain indemnification agreements from vendors that provide it with technology, there can be no assurance that any claim of infringement will be covered by an indemnity or that TDS will be able to recover all or any of its losses and costs under any available indemnity agreements. Any claims of infringement of intellectual property and proprietary rights of others could prevent TDS from using necessary technology to provide its services or subject TDS to expensive intellectual property litigation or monetary penalties.

22)Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS or have other consequences.

The TDS Restated Certificate of Incorporation and the TDS bylaws contain provisions which may serve to discourage or make more difficult a change in control of TDS without the support of the TDS Voting Trust and the TDS Board of Directors or without meeting various other conditions.

The TDS Restated Certificate of Incorporation authorizes the issuance of different series of common stock, which have different voting rights. The TDS Series A Common Shares have the power to elect approximately 75% (less one) of the directors and have ten votes per share in matters other than the election of directors. The TDS Common Shares (with one vote per share) vote as a separate group only with respect to the election of 25% (plus one) of the directors. In addition, the total percentage voting power in matters other than the election of directors of the Series A Common Shares and Common Shares are fixed, at 56.7% and 43.3%, respectively, subject to adjustment due to changes in the number of outstanding Series A Common Shares.

A substantial majority of the outstanding TDS Series A Common Shares are held in the TDS Voting Trust which expires on June 30, 2035. The TDS Voting Trust was created to facilitate the long-standing relationships among the trustees’ certificate holders. By virtue of the number of shares held by them, the voting trustees have the power to elect eight directors based on the current TDS Board of Directors’ size of twelve directors, and control a majority of the voting power of TDS with respect to matters other than the election of directors.

The existence of the TDS Voting Trust is likely to deter any potential unsolicited or hostile takeover attempts or other efforts to obtain control of TDS and may make it more difficult for shareholders to sell shares of TDS at higher than market prices. The trustees of the TDS Voting Trust have advised TDS that they intend to maintain the ability to keep or dispose of voting control of TDS.

The TDS Restated Certificate of Incorporation also authorizes the TDS Board of Directors to designate and issue TDS Undesignated Shares in one or more classes or series of preferred or common stock from time to time. Generally, no further action or authorization by the shareholders is necessary prior to the designation or issuance of the additional TDS Undesignated Shares authorized pursuant to the TDS Restated Certificate of Incorporation unless applicable laws or regulations would require such approval in a given instance. Such TDS Undesignated Shares could be issued in circumstances that would serve to preserve control of TDS’ then existing management.

In addition, the TDS Restated Certificate of Incorporation includes a provision which authorizes the TDS Board of Directors to consider various factors, including effects on customers, taxes, and the long-term and short-term interests of TDS, in the context of a proposal or offer to acquire or merge the corporation, or to sell its assets, and to reject such offer if the TDS Board of Directors determines that the proposal is not in the best interests of the corporation based on such factors.

The provisions of the TDS Restated Certificate of Incorporation and the TDS bylaws and the existence of various classes of capital stock could prevent shareholders from profiting from an increase in the market value of their shares as a result of a change in control of TDS by delaying or preventing such change in control.

The provisions of the TDS Restated Certificate of Incorporation and the existence of different classes of capital stock and voting rights could result in the exclusion of TDS Common Shares from certain major stock indices at some point in the future, unless TDS is grandfathered by such stock indices or qualifies for some other exception.

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General Risk Factors

23)TDS has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on TDS' business, financial condition or results of operations.

TDS experiences cyber-attacks of varying degrees on a regular basis. These include cyber-attacks intended to wrongfully obtain private and valuable information, or cause other types of malicious events, including denial of service attacks which may cause TDS' services to be disrupted or unavailable to customers. TDS maintains administrative, technical and physical controls, as well as other preventative actions, to reduce the risk of security breaches. Although to date TDS has not discovered a material security breach, these efforts may be insufficient to prevent a material security breach stemming from future cyber-attacks. If TDS’ or its vendors’ networks and information technology are not adequately adapted to changes in technology or are damaged or fail to function properly, and/or if TDS’ or its vendors’ security is breached or otherwise compromised, TDS could suffer adverse consequences, including theft, destruction or other loss of critical and private data, including customer and/or employee data, interruptions or delays in its operations, inaccurate billings, inaccurate financial reporting, and significant costs to remedy the problems. If TDS’ or its vendors’ systems become unavailable or suffer a security breach of customer or other data, TDS may be required to expend significant resources and take various actions to address the problems, including notification under data privacy laws and regulations, may be subject to fines, sanctions and litigation, and its reputation and operating results could be adversely affected. TDS continues to experience denial of service attacks. Although TDS has implemented and continues to enhance its protection and recovery measures in response to such attacks, these efforts may be insufficient to prevent a material denial of service attack in the future.

24)Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations.

Disruptions in the credit and financial markets, declines in consumer confidence, increases in unemployment, declines in economic growth, increased tariffs on import goods and uncertainty about corporate earnings could have a significant negative impact on the U.S. and global financial and credit markets and the overall economy. Such events could have an adverse impact on financial institutions resulting in limited access to capital and credit for many companies. Furthermore, economic uncertainties make it very difficult to accurately forecast and plan future business activities. Changes in economic conditions, changes in financial markets, changes in U.S. trade policies, deterioration in the capital markets or other factors could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows.

25)The impact of public health emergencies, such as the COVID-19 pandemic, on TDS' business is uncertain, but depending on duration and severity could have a material adverse effect on TDS' business, financial condition or results of operations.

The impact of the global spread of COVID-19 on TDS' future operations is uncertain. Public health emergencies, such as COVID-19, pose the risk that TDS or its associates, agents, partners and suppliers may be unable to conduct business activities for an extended period of time and/or provide the level of service expected. TDS' ability to attract customers, maintain an adequate supply chain and execute on its business strategies and initiatives could be negatively impacted by this outbreak. Additionally, COVID-19 has caused and could continue to cause increased unemployment and an economic downturn, both of which could negatively impact TDS. The extent of the impact of COVID-19 on TDS' business, financial condition and results of operations will depend on future circumstances, including the severity of the disease, the duration of the outbreak, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

TDS has properties located throughout the United States. As of December 31, 2020, TDS’ gross investment in property, plant and equipment was as follows:

UScellular’s local business offices, cell sites, cell site equipment, connectivity centers, data centers, call centers and retail stores are located primarily in UScellular’s operating markets. These properties are either owned or leased by UScellular, one of its subsidiaries, or the partnership, limited liability company or corporation which holds the license issued by the FCC.

Wireline owns or leases its physical assets consisting of telephone distribution networks, network electronic equipment, customer premises equipment, land and buildings.

Cable owns or leases its physical assets consisting of cable distribution networks, headends, customer premises equipment, land and buildings.

Parent and Other fixed assets consist of assets, which are either owned or leased, at TDS Corporate, HMS, and Suttle-Straus.

As of December 31, 2020, the gross investment in property, plant and equipment was $8,785 million at UScellular, $3,947 million at Wireline, $568 million at Cable, and $359 million at Parent & Other. See Note 9 — Property, Plant and Equipment in the Notes to Consolidated Financial Statements for additional information.

Item 3. Legal Proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. See Note 14 — Commitments and Contingencies in the Notes to Consolidated Financial Statements for further information.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market, holder, dividend and performance graph information is incorporated by reference from Exhibit 13 to this Form 10-K Annual Report section entitled “Shareholder Information.”

TDS paid quarterly dividends per outstanding share of $0.170 in 2020, $0.165 in 2019 and $0.160 in 2018. TDS increased the dividend per share to $0.175 in the first quarter of 2021. TDS has no current plans to change its policy of paying dividends.

Information relating to Issuer Purchases of Equity Securities is set forth below.

On August 2, 2013, the Board of Directors of TDS authorized, and TDS announced by Form 8-K, a $250 million stock repurchase program for TDS Common Shares. Depending on market conditions, such shares may be repurchased in compliance with Rule 10b-18 of the Exchange Act, pursuant to Rule 10b5-1 under the Exchange Act, or pursuant to accelerated share repurchase arrangements, prepaid share repurchases, private transactions or as otherwise authorized. This authorization does not have an expiration date. TDS did not determine to terminate the foregoing Common Share repurchase program, or cease making further purchases thereunder, during the fourth quarter of 2020.

TDS determines whether to repurchase shares from time to time based on many considerations, including cash needed for other known or possible requirements, the stock price, market conditions, debt rating considerations, business forecasts, business plans, macroeconomic conditions, share issuances under compensation plans, provisions in governing and legal documents and other legal requirements, and other facts and circumstances. Subject to these considerations, TDS may approve the repurchase of its shares from time to time when circumstances warrant.

The maximum dollar value of shares that may yet be purchased under this program was $185 million as of December 31, 2020. There were no purchases made by or on behalf of TDS, and no open market purchases made by any “affiliated purchaser” (as defined by the SEC) of TDS, of TDS Common Shares during the quarter ended December 31, 2020.

Item 6. Selected Financial Data

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Incorporated by reference from Exhibit 13 to this Form 10-K Annual Report section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Incorporated by reference from Exhibit 13 to this Form 10-K Annual Report section entitled “Market Risk.”

Item 8. Financial Statements and Supplementary Data

Incorporated by reference from Exhibit 13 to this Form 10-K Annual Report sections entitled “Consolidated Statement of Operations,” “Consolidated Statement of Comprehensive Income,” “Consolidated Statement of Cash Flows,” “Consolidated Balance Sheet,” “Consolidated Statement of Changes in Equity,” “Notes to Consolidated Financial Statements,” “Management’s Report on Internal Control Over Financial Reporting,” and “Report of Independent Registered Public Accounting Firm.”

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures 

TDS maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in its reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to TDS’ management, including its principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As required by SEC Rule 13a-15(b), TDS carried out an evaluation, under the supervision and with the participation of management, including its principal executive officer and principal financial officer, of the effectiveness of the design and operation of TDS’ disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that TDS’ disclosure controls and procedures were effective as of December 31, 2020, at the reasonable assurance level. 

Management’s Report on Internal Control Over Financial Reporting 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. TDS’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). TDS’ internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and, where required, the board of directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the issuer’s assets that could have a material effect on the interim or annual consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of TDS’ management, including its principal executive officer and principal financial officer, TDS conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2020, based on the criteria established in the 2013 version of Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has concluded that TDS maintained effective internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 version of Internal Control — Integrated Framework issued by the COSO.

The effectiveness of TDS’ internal control over financial reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in the firm’s report which is incorporated by reference into Item 8 of this Annual Report on Form 10-K from Exhibit 13 filed herewith.

Changes in Internal Control Over Financial Reporting

There were no changes in TDS’ internal control over financial reporting during the fourth quarter of 2020 that have materially affected, or are reasonably likely to materially affect, TDS’ internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Incorporated by reference from Proxy Statement sections entitled “Election of Directors,” “Corporate Governance” and “Executive Officers.”

Item 11. Executive Compensation

Incorporated by reference from Proxy Statement section entitled “Executive and Director Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Incorporated by reference from Proxy Statement sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

Incorporated by reference from Proxy Statement sections entitled “Corporate Governance” and “Certain Relationships and Related Transactions.”

Item 14. Principal Accountant Fees and Services

Incorporated by reference from Proxy Statement section entitled “Fees Paid to Principal Accountants.”

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	The following documents are filed as part of this report:
	(1)	Financial Statements
		Consolidated Statement of Operations	Annual Report*
		Consolidated Statement of Comprehensive Income	Annual Report*
		Consolidated Statement of Cash Flows	Annual Report*
		Consolidated Balance Sheet	Annual Report*
		Consolidated Statement of Changes in Equity	Annual Report*
		Notes to Consolidated Financial Statements	Annual Report*
		Management's Report on Internal Control Over Financial Reporting	Annual Report*
		Report of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP	Annual Report*
		*Incorporated by reference from Exhibit 13.
	(2)	Exhibits
		The exhibits set forth below are filed as a part of this Report. Compensatory plans or arrangements are identified below with an asterisk.

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Exhibit Number	Description of Documents
3.1	TDS’ Restated Certificate of Incorporation, dated January 24, 2012, is hereby incorporated by reference to Exhibit 1 to TDS’ Registration Statement on Form 8-A/A dated January 24, 2012.
3.2	TDS Restated Bylaws, as amended, are hereby incorporated by reference to Exhibit 3.1 to TDS’ Current Report on Form 8-K dated May 23, 2019.
4.1	TDS’ Restated Certificate of Incorporation is hereby incorporated as Exhibit 3.1.
4.2	TDS Restated Bylaws, as amended, are hereby incorporated as Exhibit 3.2.
4.3(a)	Indenture for Senior Debt Securities between TDS and The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A., as successor to BNY Midwest Trust Company (BNY) dated November 1, 2001, is hereby incorporated by reference to Exhibit 4 to TDS’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.
4.3(b)	Third Supplemental Indenture dated March 31, 2005, by and between TDS and BNY, establishing TDS’ 6.625% Senior Notes due 2045, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated March 23, 2005.
4.3(c)	Fourth Supplemental Indenture dated November 16, 2010, by and between TDS and BNY, establishing TDS’ 6.875% Senior Notes due 2059, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated November 16, 2010.
4.3(d)	Fifth Supplemental Indenture dated March 21, 2011, by and between TDS and BNY, establishing TDS’ 7% Senior Notes due 2060, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated March 21, 2011.
4.3(e)	Sixth Supplemental Indenture dated November 26, 2012, by and between TDS and BNY, establishing TDS’ 5.875% Senior Notes due 2061, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated November 26, 2012.
4.4(a)	Indenture for Senior Debt Securities dated June 1, 2002, between UScellular and BNY is hereby incorporated by reference to Exhibit 4.1 to Form S-3 dated May 31, 2013 (File No. 333-188971).
4.4(b)	Form of Third Supplemental Indenture dated as of December 3, 2003, between UScellular and BNY, relating to $444,000,000 of UScellular’s 6.7% Senior Notes due 2033, is hereby incorporated by reference to Exhibit 4.1 to UScellular’s Current Report on Form 8-K dated December 3, 2003.
4.4(c)	Form of Fifth Supplemental Indenture dated as of June 21, 2004, between UScellular and BNY, relating to $100,000,000 of UScellular’s 6.7% Senior Notes due 2033, is hereby incorporated by reference to Exhibit 4.1 to UScellular’s Current Report on Form 8-K dated June 21, 2004.
4.4(d)	Form of Sixth Supplemental Indenture dated as of May 9, 2011, between UScellular and BNY, relating to $342,000,000 of UScellular’s 6.95% Senior Notes due 2060, is hereby incorporated by reference to Exhibit 4.1 to UScellular’s Current Report on Form 8-K dated May 9, 2011.
4.4(e)	Form of Seventh Supplemental Indenture dated as of December 8, 2014, between UScellular and BNY, relating to $275,000,000 of UScellular’s 7.25% Senior Notes due 2063, is hereby incorporated by reference to Exhibit 2 to UScellular’s Registration Statement on Form 8-A dated December 2, 2014.

4.4(f)	Form of Eighth Supplemental Indenture dated as of November 23, 2015, between UScellular and BNY, relating to $300,000,000 of UScellular’s 7.25% Senior Notes due 2064, is hereby incorporated by reference to Exhibit 2 to UScellular’s Registration Statement on Form 8-A dated November 17, 2015.
4.4(g)	Form of Ninth Supplemental Indenture dated as of August 12, 2020, between UScellular and The Bank of New York Mellon Trust Company, N.A., related to $500,000,000 of UScellular's 6.25% Senior Notes due 2069, is hereby incorporated by reference to Exhibit 2 to UScellular's Registration Statement on Form 8-A dated August 12, 2020.
4.4(h)	Form of Tenth Supplemental Indenture dated as of December 2, 2020, between UScellular and The Bank of New York Mellon Trust Company, N.A., related to $500,000,000 of UScellular's 5.5% Senior Notes due 2070 is hereby incorporated by reference to Exhibit 2 to UScellular's Registration Statement on Form 8-A dated December 2, 2020.
4.5	Indenture for Subordinated Debt Securities between TDS and BNY is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated September 16, 2013.
4.6	Indenture for Subordinated Debt Securities between UScellular and BNY is hereby incorporated by reference to Exhibit 4.1 to UScellular’s Current Report on Form 8-K dated September 16, 2013.
4.7(a)	Master Indenture for asset-backed notes by and among USCC Master Note Trust, USCC Services, LLC and U.S. Bank National Association, as Indenture Trustee, dated December 20, 2017, is hereby incorporated by reference to Exhibit 4.1 to UScellular’s Form 8-K dated December 20, 2017.

25

4.7(b)**	Omnibus Amendment No. 1 to Master Indenture, Series 2017-VFN Indenture Supplement, Note Purchase Agreement, Receivables Purchase Agreement and Transfer and Servicing Agreement dated September 30, 2019 among USCC Master Note Trust, U.S. Bank National Association, as Indenture Trustee, USCC Services, LLC, USCC Receivables Funding LLC, USCC EIP LLC, and Royal Bank of Canada, as administrative agent for owners of the notes, is hereby incorporated by reference to Exhibit 4.3 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2019.
4.8(a)	Supplemental Indenture for Series 2017-VFN Floating Rate Asset-Backed Notes by and among USCC Master Note Trust, USCC Services, LLC and U.S. Bank National Association, dated December 20, 2017, is hereby incorporated by reference to Exhibit 4.2 to UScellular’s Form 8-K dated December 20, 2017.
4.8(b)	Supplemental Indenture No. 2 by and among USCC Master Note Trust, USCC Services LLC, U.S. Bank National Association, as Indenture Trustee, dated October 23, 2020, is hereby incorporated by reference to Exhibit 4.2 from UScellular's Form 8-K dated October 23, 2020.
4.9(a)	Term Loan Credit Agreement, among TDS, CoBank, ACB, as administrative agent, and the lenders thereto, dated as of January 6, 2020, is hereby incorporated by reference to Exhibit 4.1 to TDS' Current Report on Form 8-K dated January 6, 2020.
4.9(b)	First Amendment to Term Loan Credit Agreement, among TDS, CoBank, ACB as administrative agent, and the lenders thereto, dated as of March 2, 2020, is hereby incorporated by reference to Exhibit 4.2 to TDS' Current Report on Form 8-K dated March 2, 2020.
4.10	Revolving Credit Agreement, among TDS, Wells Fargo National Association, as administrative agent, and the other lenders thereto, dated as of March 2, 2020, including the form of subsidiary Guaranty, is hereby incorporated by reference to Exhibit 4.1 to TDS' Current Report on Form 8-K dated March 2, 2020.
4.11	Revolving Credit Agreement, among UScellular, Toronto Dominion (Texas) LLC, as administrative agent, and the other lenders thereto, dated as of March 2, 2020, including the form of the subsidiary Guaranty and Subordination Agreement, is hereby incorporated by reference to Exhibit 4.1 to UScellular's Form 8-K dated March 2, 2020.
4.12	Second Amended and Restated Credit Agreement, among UScellular and CoBank, ACB, as administrative agent, and the other lenders thereto, dated as of June 11, 2020, is hereby incorporated by reference to Exhibit 4.1 to UScellular's Form 8-K dated June 11, 2020.
4.13	Amended and Restated Series 2017-VFN Indenture Supplement by and among USCC Master Note Trust, as Issuer, USCC Services, LLC, as Servicer, and U.S. Bank National Association, as Indenture Trustee, dated October 23, 2020, is hereby incorporated by reference to Exhibit 4.1 from UScellular's Form 8-K dated October 23, 2020.
4.14	Description of TDS' Securities.
9.1	Amendment and Restatement (dated April 22, 2005) of Voting Trust Agreement dated June 30, 1989, is hereby incorporated by reference to the Exhibit filed on Amendment No. 3 to Schedule 13D dated May 2, 2005, filed by the trustees of such voting trust with respect to TDS Common Shares.
10.1(a)*	TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated April 11, 2005.
10.1(b)*	First Amendment to TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.3 to TDS’ Current Report on Form 8-K dated December 10, 2007.
10.1(c)*	Second Amendment to TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.4 to TDS’ Current Report on Form 8-K dated December 10, 2007.
10.1(d)*	Third Amendment to TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated December 22, 2008.
10.2(a)*	Telephone and Data Systems, Inc. 2011 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit B to TDS’ Notice of Annual Meeting of Shareholders and Proxy Statement dated April 18, 2014.
10.2(b)*	Amendment No. 1 to Telephone and Data Systems, Inc. 2011 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit A to TDS’ Notice of Annual Meeting of Shareholders and Proxy statement dated April 18, 2014.
10.2(c)*	Amendment No. 2 to Telephone and Data Systems, Inc. 2011 Long-Term Incentive Plan, is hereby incorporated by reference to Exhibit 10.2(c) to TDS’ Annual Report on Form 10-K for the year ended December 31, 2018.

10.3(a)*	TDS Supplemental Executive Retirement Plan, as amended and restated, effective January 1, 2009, is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated August 27, 2008.
10.3(b)*	Amendment Number One to the Telephone and Data Systems, Inc. Supplemental Executive Retirement Plan, is hereby incorporated by reference to Exhibit 10.2 to Telephone and Data Systems, Inc.’s Current Report on Form 8-K dated March 15, 2012.
10.3(c)*	Amendment Number Two to the Telephone and Data Systems, Inc. Supplemental Executive Retirement Plan, is hereby incorporated by reference to Exhibit 10.3 to Telephone and Data Systems, Inc.’s Current Report on Form 8-K dated November 3, 2014.

26

10.4*	TDS’ Amended and Restated Compensation Plan for Non-Employee Directors, dated December 7, 2017, is hereby incorporated by reference to Exhibit 10.4 to TDS' Annual Report on Form 10-K for the year ended December 31, 2017.
10.5*	TDS Bonus Deferral and Stock Unit Match Program and Election Form is hereby incorporated by reference to Exhibit 10.6 to TDS’ Annual Report on Form 10-K for the year ended December 31, 2012.
10.6*	UScellular 2005 Long-Term Incentive Plan, as amended, is hereby incorporated by reference to Exhibit C to UScellular’s Notice of Annual Meeting of Shareholders and Proxy Statement dated April 15, 2009.
10.7(a)*	UScellular 2013 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit B to UScellular’s Notice of Annual Meeting of Shareholders and Proxy Statement dated April 12, 2016.
10.7(b)*	Amendment No. 1 to UScellular 2013 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit A to UScellular's Notice of Annual Meeting of Shareholders and Proxy Statement dated April 12, 2016.
10.7(c)*	Amendment No. 2 to UScellular 2013 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.11(c) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2018.
10.7(d)*	Amendment No. 3 to UScellular 2013 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.11(d) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2020.
10.8(a)*	UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.1 to UScellular’s Current Report on Form 8-K dated December 10, 2007.
10.8(b)*	First Amendment to UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.6 to UScellular’s Current Report on Form 8-K dated December 9, 2008.
10.8(c)*	Second Amendment to UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.12(c) to UScellular’s Annual Report on Form 10-K for the year ended December 31, 2012.
10.8(d)*	Election Form for UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.12(d) to UScellular’s Annual Report on Form 10-K for the year ended December 31, 2012.
10.8(e)*	Third Amendment to UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.13(e) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2020.
10.8(f)*	Fourth Amendment to UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.13(f) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2020.
10.8(g)*	Fifth Amendment to UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.13(g) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2020.
10.8(h)*	Sixth Amendment to UScellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.13(h) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2020.
10.9(a)*	UScellular Form of Long-Term Incentive Plan Executive Deferred Compensation Agreement — Phantom Stock Account for officers is hereby incorporated by reference to Exhibit 10.5 to UScellular’s Current Report on Form 8-K dated May 14, 2013.
10.9(b)*	UScellular Form of Long-Term Incentive Plan Executive Deferred Compensation Agreement — Phantom Stock Account is hereby incorporated by reference to Exhibit 10.12(b) to UScellular's Annual Report on Form 10-K for the year ended December 31, 2020.
10.10(a)*	TDS 2007 Deferred Compensation Agreement between TDS and Kenneth R. Meyers dated December 26, 2006, is hereby incorporated by reference to Exhibit 99.1 to TDS’ Current Report on Form 8-K dated January 1, 2007.
10.10(b)*	Amendment to TDS 2007 Deferred Compensation Agreement between TDS and Kenneth R. Meyers is hereby incorporated by reference to Exhibit 10.4 to TDS Current Report on Form 8-K dated December 22, 2008.
10.11*	Form of TDS Corporate Officer Long-Term Incentive Plan Stock Option Award Agreement for Officers, is hereby incorporated by reference to Exhibit 10.3 to TDS’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.
10.12*	Form of TDS Corporate Officer Long-Term Incentive Plan Restricted Stock Unit Award Agreement is hereby incorporated by reference to Exhibit 10.2 to TDS’ Current Report on Form 8-K dated May 1, 2015.
10.13*	Form of 2017 TDS Performance Share Award Agreement, is hereby incorporated by reference to Exhibit 10.2 to TDS' Current Report on Form 8-K dated May 24, 2017.
10.14*	Form of 2018 TDS Performance Share Award Agreement, is hereby incorporated by reference to Exhibit 10.1 to TDS' Current Report on Form 8-K dated March 14, 2018.
10.15*	Form of 2019 TDS Performance Share Award Agreement is hereby incorporated by reference to Exhibit 10.2 to TDS' Current Report on Form 8-K dated March 12, 2019.

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10.16*	TDS Incentive Plan is hereby incorporated by reference to Exhibit A to TDS’ Notice of Annual Meeting of Shareholders and Proxy Statement dated April 12, 2017.
10.17*	TDS 2020 Officer Bonus Program is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated March 18, 2020.
10.18*	Amended and Restated Guidelines for the determination of Annual Bonus for President and Chief Executive Officer of TDS are hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated November 18, 2009.
10.19*	Guidelines for the determination of Annual Bonus for President and Chief Executive Officer of UScellular are hereby incorporated by reference to Exhibit 10.2 to UScellular’s Current Report on Form 8-K dated August 19, 2014.
10.20*	Form of TDS Deferred Compensation Agreement is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated December 21, 2009.
10.21*	Change of Election Form for TDS Deferred Compensation Agreement is hereby incorporated by reference to Exhibit 10.2 to TDS’ Current Report on Form 8-K dated December 21, 2009.
10.22*	Pre 2005 Form of Deferred Compensation Agreement used by TDS Telecommunications LLC is hereby incorporated by reference to Exhibit 10.28 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.23(a)*	Post 2004 TDS Telecommunications LLC Executive Deferred Compensation Program, as amended and restated effective January 1, 2008, is hereby incorporated by reference to Exhibit 10.29 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.23(b)*	First Amendment to TDS Telecommunications LLC Executive Deferred Compensation Program dated October 8, 2008, is hereby incorporated by reference to Exhibit 10.30 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.24*	Current Initial Election Form and Post 2004 Payment Election Form for TDS Telecommunications LLC Executive Deferred Compensation Program is hereby incorporated by reference to Exhibit 10.31 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.25*	Current Annual Election Form for TDS Telecommunications LLC Executive Deferred Compensation Program is hereby incorporated by reference to Exhibit 10.32 to TDS' Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.26*	Form of UScellular 2013 Long-Term Incentive Plan Restricted Stock Unit Award Agreement for the President and Chief Executive Officer of UScellular, is hereby incorporated by reference to Exhibit 10.2 to UScellular’s Current Report on Form 8-K dated April 3, 2017.
10.27*	Letter Agreement dated July 25, 2013, between UScellular and Kenneth R. Meyers is hereby incorporated by reference to Exhibit 10.1 to UScellular’s Current Report on Form 8-K dated July 25, 2013.
10.28**	2019 Master Service Agreement effective October 1, 2019 between USCC Services, LLC and Amdocs Tethys Limited, is hereby incorporated by reference to Exhibit 10.6 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2019.
10.29**	Amended and Restated Software License and Maintenance Agreement effective October 1, 2019 between USCC Services, LLC and Amdocs Tethys Limited is hereby incorporated by reference to Exhibit 10.9 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2019.
10.30**	2019 Master Statement of Work for Managed Services effective October 1, 2019 between USCC Services, LLC and Amdocs Tethys Limited, is hereby incorporated by reference to Exhibit 10.7 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2019.
10.31**	2019 Managed Services Statement of Work No. 1 effective October 1, 2019 between USCC Services, LLC and Amdocs Tethys Limited is hereby incorporated by reference to Exhibit 10.8 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2019.
10.32	Performance Guaranty and Parent Undertaking Agreement by UScellular in favor of the Guaranteed Parties defined therein, dated December 20, 2017, is hereby incorporated by reference to Exhibit 10.2 to UScellular’s Form 8-K dated December 20, 2017.
10.33	Amended and Restated Trust Agreement between USCC Receivables Funding LLC, as transferor, and Wilmington Trust, National Association, as Trustee, is hereby incorporated by reference to Exhibit 10.3 to UScellular’s Form 8-K dated December 20, 2017.
10.34**	Omnibus Amendment No. 1 to Master Indenture, Series 2017-VFN Indenture Supplement, Note Purchase Agreement, Receivables Purchase Agreement and Transfer and Servicing Agreement dated September 30, 2019 among USCC Master Note Trust, U.S. Bank National Association, as Indenture Trustee, USCC Services, LLC, USCC Receivables Funding LLC, USCC EIP LLC, and Royal Bank of Canada, as administrative agent for owners of the notes, is hereby incorporated by reference to Exhibit 4.3 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2019.

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10.35*	Telephone and Data Systems, Inc. Executive Deferred Compensation Program, is hereby incorporated by reference to Exhibit 10.1 to TDS' Current Report on Form 8-K dated December 9, 2019.
10.36*	TDS 2020 Long-Term Incentive Plan, is hereby incorporated by reference from Exhibit A to the TDS definitive proxy statement dated April 8, 2020, which was filed with the SEC on Schedule 14A on April 8, 2020.
10.37*	Form of TDS 2020 Long-Term Incentive Plan Performance Share Award Agreement is hereby incorporated by reference to Exhibit 10.4 to TDS' Quarterly Report on Form 10-Q for the period ended June 30, 2020.
10.38*	Form of TDS 2020 Long-Term Incentive Plan Stock Option Award Agreement is hereby incorporated by reference to Exhibit 10.5 to TDS' Quarterly Report on Form 10-Q for the period ended June 30, 2020.
10.39*	Form of TDS 2020 Long-Term Incentive Plan Restricted Stock Unit Award Agreement is hereby incorporated by reference to Exhibit 10.6 to TDS' Quarterly Report on Form 10-Q for the period ended June 30, 2020.
10.40*	UScellular 2013 Long-Term Incentive Plan 2020 Restricted Stock Unit Award Agreement for UScellular's President and CEO is hereby incorporated by reference to Exhibit 10.5 to UScellular's Quarterly Report on Form 10-Q for the period ended June 30, 2020.
10.41*	Letter Agreement between UScellular and Laurent C. Therivel dated June 1, 2020, is hereby incorporated by reference to Exhibit 10.6 to UScellular's Quarterly Report on Form 10-Q for the period ended June 30, 2020.
10.42*	UScellular 2013 Long-Term Incentive Plan 2020 Accomplishment Award Agreement for UScellular's President and CEO is hereby incorporated by reference to Exhibit 10.1 to UScellular's Quarterly Report on Form 10-Q for the period ended September 30, 2020.
10.43	Amended and Restated Series 2017-VFN Note Purchase Agreement by and among USCC Receivables Funding LLC, as Transferor, USCC Master Note Trust, as Issuer, USCC Services, LLC, as Servicer, UScellular as Performance Guarantor, and Royal Bank of Canada, as Administrative Agent for owners of the notes, dated October 23, 2020, is hereby incorporated by reference to Exhibit 10.1 from UScellular's Form 8-K dated October 23, 2020.
13	Incorporated portions of 2020 Annual Report to Shareholders.
21	Subsidiaries of TDS.
23.1	Consent of Independent Registered Public Accounting Firm—PricewaterhouseCoopers LLP.
31.1	Principal executive officer certification pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
31.2	Principal financial officer certification pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
32.1	Principal executive officer certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2	Principal financial officer certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the inline document.
*	Indicates a management contract or compensatory plan or arrangement
**	Portions of this Exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated under the Exchange Act.

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Item 16. Form 10-K Summary

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TELEPHONE AND DATA SYSTEMS, INC.
By:	/s/ LeRoy T. Carlson, Jr.
	LeRoy T. Carlson, Jr.
	President and Chief Executive Officer
	(principal executive officer)
By:	/s/ Peter L. Sereda
	Peter L. Sereda
	Executive Vice President and Chief Financial Officer
	(principal financial officer)
By:	/s/ Anita J. Kroll
	Anita J. Kroll
	Vice President - Controller and Chief Accounting Officer
	(principal accounting officer)

Dated:  February 18, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ LeRoy T. Carlson, Jr.	Director	February 18, 2021
LeRoy T. Carlson, Jr.
/s/ Letitia G. Carlson, M.D.	Director	February 18, 2021
Letitia G. Carlson, M.D.
/s/ Prudence E. Carlson	Director	February 18, 2021
Prudence E. Carlson
/s/ Walter C. D. Carlson	Director	February 18, 2021
Walter C. D. Carlson
/s/ James W. Butman	Director	February 18, 2021
James W. Butman
/s/ Clarence A. Davis	Director	February 18, 2021
Clarence A. Davis
/s/ Kimberly D. Dixon	Director	February 18, 2021
Kimberly D. Dixon
/s/ George W. Off	Director	February 18, 2021
George W. Off
/s/ Christopher D. O’Leary	Director	February 18, 2021
Christopher D. O’Leary
/s/ Wade Oosterman	Director	February 18, 2021
Wade Oosterman
/s/ Gary L. Sugarman	Director	February 18, 2021
Gary L. Sugarman
/s/ Laurent C. Therivel	Director	February 18, 2021
Laurent C. Therivel

EX-4.14

Exhibit 4.14

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

As of December 31, 2020, Telephone and Data Systems, Inc. has five classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) our Common Stock; (2) our 6.625% Senior Notes due 2045; (3) our 6.875% Senior Notes due 2059; (4) our 7.000% Senior Notes due 2060; and (5) our 5.875% Senior Notes due 2061.

Description of Common Stock

The following description of our Common Stock is a summary and does not purport to be complete. It issubject to and qualified in its entirety by reference to our Restated Certificate of Incorporation (the “Certificate of Incorporation”) and our Restated Bylaws, as amended (the “Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.12 is a part. We encourage you toread our Certificate of Incorporation, our Bylaws and the applicable provisions of Delaware General Corporation Law, as amended, for additional information.

Authorized Capital Shares

Our authorized capital shares consist of 265,000,000 shares of common stock, $0.01 par value per share (“Common Stock”), 25,000,000 shares of series A common stock, $0.01 par value per share (“Series A Stock”), 4,720,599 shares of undesignated stock, $0.01 par value per share (“Undesignated Stock”) and 279,401 shares of series preferred stock, $0.01 par value per share (“Preferred Stock”). The outstanding shares of our Common Stock are fully paid and nonassessable.

Voting Rights

In the election of directors, holders of Common Stock have one vote per share and vote in the election of 25% of the total number of directors for the TDS Board of Directors rounded up to the next whole number. The holders of Series A Stock elect the remaining directors.

In matters other than the election of directors, the per share voting power of the Common Stock varies and is calculated in accordance with Section B.9. of Article IV of the Certificate of Incorporation. In matters other than the election of directors, the per share voting power of the Series Stock is ten votes per share.

In addition, the TDS Voting Trust controls a majority of the voting power of TDS in matters other than the election of certain directors. In general, only the affirmative vote of the TDS Voting Trust will be required to amend the TDS Restated Certificate of Incorporation, approve the sale of substantially all of the assets of TDS, approve the dissolution of TDS or approve any other matter required to be voted on by shareholders, except as required under the TDS Restated Certificate of Incorporation or the Delaware General Corporation Law. Certain matters on which shareholders would vote could involve a divergence or the appearance of a divergence of the interests between the holders of classes of common stock. Holders of Common Stock would not have a class vote in such matters except as required by law.

The merger or consolidation of TDS requires the approval of a majority of the voting power of Common Stock and Series A Stock, each voting separately as a class.

In matter other than the election of directors, the aggregate voting percentage of Series A Stock cannot increase above approximately 56.7% and the percentage could decrease because of the conversion of Series A Stock to Common Stock.

Our Common Stock does not have cumulative voting rights.

Dividend Rights

Subject to the rights of holders of outstanding shares of Preferred Stock or Undesignated Stock, if any, the holders of Common Stock are entitled to receive dividends, if any, as may be declared from time to time by the Board of Directors in its discretion out of funds legally available for the payment of dividends.

Liquidation Rights

Subject to any preferential rights of outstanding shares of Preferred Stock or Undesignated Stock, if any, holders of Common Stock and Series A Stock will share ratably in all assets legally available for distribution to our stockholders in the event of dissolution.

Other Rights and Preferences

Our Common Stock has no sinking fund provisions or preemptive, conversion or exchange rights.

Our Common Stock may be subject to redemption if, in the judgment of the Board such action is necessary to prevent the loss or secure the reinstatement of any license of franchise from any governmental agency held by TDS or any of its subsidiaries. The redemption price is the fair market value of such Common Stock as calculated in accordance with Section B.11. of Article IV of the Certificate of Incorporation.

Holders of Common Stock may act by written consent if shares representing not less than 90% of the voting power of the shares that would be necessary to authorize or take such action at a meeting at which all shares of capital stock of TDS entitled to vote thereon were present and voted.

Limitations on Rights of Holders of Common Stock - Preferred Stock and Undesignated Stock

The rights of holders of Common Stock may be materially limited or qualified by the rights of holders of Preferred Stock and Undesignated Stock that we may issue in the future.

The Board may, without further shareholder action, authorize the issuance of up to 4,720,599 of Undesignated Stock into common or preferred shares, in one or more classes or series, and to fix the designations, relative rights, preferences and limitations, including the dividend rate, redemption and sinking fund provisions, liquidation preferences, conversion rights and voting rights of each class or series.

Anti-Takeover Effects of Certain Provisions of Delaware Law

We are subject to the provisions of Section 203 of the Delaware General Corporation Law (“Delaware Section 203”). In general, the law prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date the person became an interested stockholder, unless:

•prior to such date, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

•upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares described in Delaware Section 203); or

•on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the “interested stockholder.”

Under Delaware Section 203, “Business combination” includes mergers, consolidations, asset sales and certain other transactions resulting in a financial benefit to a stockholder. An “interested stockholder” is defined generally as a person who, together with affiliates and associates, owns (or, within the prior three years, did own) 15% or more of a corporation’s voting stock. Our Certificate of Incorporation does not exclude us from the restrictions imposed under Delaware Section 203 and Delaware Section 203 could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage attempts to acquire us.

Limitation of Liability

    Our Certificate of Incorporation provides that, to the full extent authorized by the Delaware General Corporation Law, directors of TDS will not be personally liable to the TDS or its shareholders for monetary damages for breach of fiduciary duty as a director.

Listing

The Common Stock is traded on The New York Stock Exchange under the trading symbol “TDS.”

Description of the Notes

The following description of our 6.625% Senior Notes due 2045 (the “2045 Notes”), our 6.875% Senior Notes due 2059 (the “2059 Notes”), our 7.000% Senior Notes due 2060 (the “2060 Notes”), and our 5.875% Senior Notes due 2061 (the “2061 Notes” and, together with our 2045 Notes, 2059 Notes and 2060 Notes, the “notes”), is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the Indenture for Senior Debt Securities between TDS and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), formerly known as The Bank of New York Trust Company, N.A., as successor to BNY Midwest Trust Company (BNY) dated November 1, 2001 (the “Base Indenture”), as supplemented in the case of the 2045 Notes by the third supplemental indenture dated March 31, 2005, as supplemented in the case of the 2059 Notes by the fourth supplemental indenture dated November 16, 2010, as supplemented in the case of the 2060 Notes by the fifth supplemental indenture dated March 21, 2011, and as supplemented in the case of the 2061 Notes by the sixth supplemental indenture dated November 26, 2012 (the Base Indenture, as supplemented by the third, fourth, fifth and sixth supplemental indentures, the “indenture”), which are incorporated by reference as exhibits to the Annual Report on Form 10-K of which this Exhibit 4.12 is a part. The 2045 Notes, the 2059 Notes, the 2060 Notes and the 2061 Notes are each traded on The New York Stock Exchange under the trading symbols of “TDI,” “TDE,” “TDJ” and “TDA,” respectively.

We encourage you to read the above referenced indenture, as supplemented, for additional information.

General

The following is a description of certain of the specific terms and conditions of the indenture supplements with respect to each of the notes.

The 2045 Notes were issued in an aggregate principal amount of $116,250,000, which remains the aggregate principal amount outstanding. The 2059 Notes were issued in an aggregate principal amount of $225,000,000, which remains the aggregate principal amount outstanding. The 2060 Notes were issued in an aggregate principal amount of $300,000,000, which remains the aggregate principal amount outstanding. The 2061 Notes were issued in an aggregate principal amount of $195,000,000, which remains the aggregate principal amount outstanding.

The notes are senior unsecured obligations and rank equally with our other unsecured and unsubordinated debt from time to time outstanding. However, in certain circumstances the notes, other than the 2045 Notes, may become effectively subordinated to the claims of the of the holders of the 2045 Notes which have the benefit of covenants limiting secured debt and sale and leaseback transactions similar to, but more restrictive than, the limitations on secured debt and sale and leaseback transactions in the other notes. In the event TDS incurs secured debt or enters into a sale and leaseback transaction that is excepted from the covenant protection provided to the holders of the notes but not the 2045 Notes, the notes (other than the 2045 Notes) may become effectively subordinated to the claims of the holders of the 2045 Notes up to the value of the assets subject to the lien or sale and leaseback transaction. In addition, because TDS is a holding company which conducts substantially all of its operations through subsidiaries, the right of creditors of TDS, including the holders of the notes, to participate in any distribution of the assets of any subsidiary upon its liquidation or reorganization or otherwise is subject to the prior claims of creditors of the subsidiary, except to the extent that claims of TDS itself as a creditor of the subsidiary may be recognized. As of December 31, 2020, our subsidiaries had approximately $2,577 million of long-term debt.

The maturity date of the 2045 Notes is March 31, 2045. The maturity date of the 2059 Notes is November 15, 2059. The maturity date of the 2060 Notes is March 15, 2060. The maturity date of the 2061 Notes is December 1, 2061.

The notes will be subject to legal defeasance and covenant defeasance as provided under the “Discharge, Defeasance and Covenant Defeasance” section set forth below.

The notes were issued in a form of one or more fully registered global securities, without coupons, in the name of a nominee of The Depository Trust Company (the “Depositary”), in denominations of $25.

TDS may redeem the notes, in whole or in party, at any time at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date. TDS is not required to establish a sinking fund prior to redemption.

The Base Indenture does not limit the amount of debt securities that we may issue under the Base Indenture and provides that debt securities may be issued from time to time in one or more series.

Interest and Principal

The 2045 Notes bear interest at a fixed rate of 6.625% per annum and interest is paid quarterly on March 31, June 30, September 30 and December 31 of each year until maturity. The 2059 Notes bear interest at a fixed rate of 6.875% per annum and interest is paid quarterly on February 15, May 15, August 15 and November 15 of each year until maturity. The 2060 Notes bear interest at a fixed rate of 7% per annum and interest is paid quarterly on March 15, June 15, September 15 and December 15 of each year until maturity. The 2061 Notes bear interest at a fixed rate of 5.875% per annum and interest is paid quarterly on March 1, June 1, September 1 and December 1 of each year until maturity. Each of the above dates is referred to as an “interest payment date”. We will pay interest on the notes to the persons in whose names the notes are registered at the close of business on the day immediately preceding the related interest payment date. Interest on the notes will be computed on the basis of twelve 30-day months and a 360-day year. If any interest payment date falls on a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of New York are authorized by law to close, then payment of interest will be made on the next succeeding business day and no additional interest will accrue because of the delayed payment, except that, if such business day is in the next succeeding calendar year, such payment will be made on the immediately preceding business day, with the same force and effect as if made on such date.

Optional Redemption

At any time prior to the maturity date of the notes, we will have the right at our option to redeem the notes, in whole or in part, at any time or from time to time, on at least 30 days’ but not more than 60 days’ prior notice, at a redemption price, calculated by us, equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date. The notes are not subject to any sinking fund provision.

Book-Entry and Settlement

The notes were issued in book-entry form through the facilities of the Depositary. Book-entry debt securities represented by a global security are not be exchangeable for certificated notes and will not otherwise be issuable as certificated notes.

Beneficial interests in the global securities are represented, and transfers of such beneficial interest are effected, through accounts of the Depositary acting on behalf of beneficial owners as direct or indirect participants.

Beneficial interests in the global securities will be shown on, and transfers of beneficial interests in the global securities are made only through, records maintained by the Depositary.

So long as the Depositary or its nominee is the registered owner of the global security, the Depositary or its nominee will be considered the sole owner or holder of the notes represented by such global security for all purposes under the notes and the Base Indenture and supplemental indenture pursuant to which the notes were issued. Except as provided below or as we may otherwise agree in our sole discretion, owners of beneficial interests in a global security will not be entitled to have notes represented by the global security registered in their names, will not receive or be entitled to receive physical delivery of notes in definitive form and will not be considered the owners or holders thereof under the Base Indenture or supplemental indenture pursuant to which the notes were issued. Accordingly, each person owning a beneficial interest in the global security must rely on the procedures of the Depositary and, if that person is not a participant, on the procedures of the participant through which that person owns its interest, to exercise any rights of a holder under the Base Indenture or supplemental indenture. Principal and interest payments on notes registered in the name of the Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner of the global security representing such notes. None of TDS, the Trustee, any paying agent or the registrar for the Notes will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in such global security for such notes or for maintaining, supervising or reviewing any records relating to such beneficial interests.

Trustee, Paying Agents and Security Registrar

The Bank of New York Mellon Trust Company, N.A. is the trustee under the indentures governing the notes. The Trustee is a national banking association organized under and governed by the laws of the United States of America, and provides trust services and acts as indenture trustee for numerous corporate securities issuances, including for other series of debt securities of which we are the issuer. The Trustee is an affiliate of The Bank of New York Mellon Corp., which is one of a number of banks with which TDS and its subsidiaries maintain ordinary banking relationships including, in certain cases, credit facilities. In connection therewith, we utilize or may utilize some of the banking and other services offered by The Bank of New York Mellon Corp. or its affiliates, including The Bank of New York Mellon Trust Company, N.A., in the normal course of business, including securities custody services.

Base Indenture Provisions:

Governing Law

The Base Indenture and the notes are governed by, and construed in accordance with, the laws of the State of Illinois.

Modification of the Indenture

With the Consent of Security holders. The Base Indenture contains provisions permitting TDS and the Trustee, with the consent of the holders of not less than a majority in principal amount of debt securities of each series that are affected by the modification, to modify the Base Indenture or any supplemental indenture affecting that series or the rights of the holders of that series of debt securities.

However, no such modification, without the consent of the holder of each outstanding security affected thereby, may:

•extend the fixed maturity of any debt securities of any series;

•reduce the principal amount of any debt securities of any series;

•reduce the rate or extend the time of payment of interest on any debt securities of any series;

•reduce any premium payable upon the redemption of any debt securities of any series;

•reduce the amount of the principal of a discount security that would be due and payable upon a declaration of acceleration of the maturity of any debt securities of any series;

•reduce the percentage of holders of aggregate principal amount of debt securities which are required to consent to any such supplemental indenture; or

•reduce the percentage of holders of aggregate principal amount of debt securities which are required to waive any default and its consequences.

Without the Consent of Security holders. In addition, TDS and the Trustee may execute, without the consent of any holder of debt securities, any supplemental indenture for certain other usual purposes, including:

•to evidence the succession of another person to TDS or a successor to TDS, and the assumption by any such successor of the covenants of TDS contained in the Base Indenture or otherwise established with respect to the debt securities;

•to add to the covenants of TDS further covenants, restrictions, conditions or provisions for the protection of the holders of the debt securities of all or any series, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions, conditions or provisions a default or an Event of Default, as described below, with respect to such series permitting the enforcement of all or any of the several remedies provided in the Indenture;

•to cure any ambiguity or to correct or supplement any provision contained in the Base Indenture or in any supplemental indenture which may be defective or inconsistent with any other provision contained in the Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under the Indenture as are not inconsistent with the provisions of the Base Indenture and will not adversely affect the rights of the holders of the notes of any series which are outstanding in any material respect;

•to change or eliminate any of the provisions of the Base Indenture or to add any new provision to the Base Indenture, except that such change, elimination or addition will become effective only as to debt securities issued pursuant to or subsequent to such supplemental indenture unless such change, elimination or addition does not adversely affect the rights of any security holder of outstanding debt securities in any material respect;

•to establish the form or terms of debt securities of any series as permitted by the Indenture;

•to add any additional Events of Default with respect to all or any series of outstanding debt securities;

•to add guarantees with respect to debt securities or to release a guarantor from guarantees in accordance with the terms of the applicable series of debt securities;

•to secure a series of debt securities by conveying, assigning, pledging or mortgaging property or assets to the Trustee as collateral security for such series of debt securities;

•to provide for uncertificated debt securities in addition to or in place of certificated debt securities;

•to provide for the authentication and delivery of bearer debt securities and coupons representing interest, if any, on such debt securities, and for the procedures for the registration, exchange and replacement of such debt securities, and for the giving of notice to, and the solicitation of the vote or consent of, the holders of such debt securities, and for any other matters incidental thereto;

•to evidence and provide for the acceptance of appointment by a separate or successor Trustee with respect to the debt securities and to add to or change any of the provisions of the Base Indenture as may be necessary to provide for or facilitate the administration of the trusts by more than one Trustee;

•to change any place or places where:

•the principal of and premium, if any, and interest, if any, on all or any series of debt securities will be payable,

•all or any series of debt securities may be surrendered for registration of transfer,

•all or any series of debt securities may be surrendered for exchange, and

•notices and demands to or upon TDS in respect of all or any series of debt securities and the Base Indenture may be served, which must be located in New York, New York or be the principal office of TDS;

•to provide for the payment by TDS of additional amounts in respect of certain taxes imposed on certain holders and for the treatment of such additional amounts as interest and for all matters incidental thereto;

•to provide for the issuance of debt securities denominated in a currency other than dollars or in a composite currency and for all matters incidental thereto; or

•to comply with any requirements of the SEC or the Trust Indenture Act of 1939, as amended.

Consolidation, Merger and Sale of Assets

The Base Indenture does not contain any covenant that restricts our ability to merge or consolidate with or into any other corporation, sell or convey all or substantially all of our assets to any person, firm or corporation or otherwise engage in restructuring transactions.

Events of Default

The Base Indenture provides that any one or more of the following described events, which has occurred and is continuing, constitutes an ‘‘Event of Default’’ with respect to each series of debt securities:

•failure for 30 days to pay interest on debt securities of that series when due and payable; or

•failure for three business days to pay principal or premium, if any, on debt securities of that series when due and payable whether at maturity, upon redemption, pursuant to any sinking fund obligation, by declaration or otherwise; or

•failure by TDS to observe or perform any other covenant (other than those specifically relating to another series) contained in the Indenture for 90 days after written notice to TDS from the Trustee or the holders of at least 33% in principal amount of the outstanding debt securities of that series; or

•certain events involving bankruptcy, insolvency or reorganization of TDS; or

•any other event of default provided for in a series of debt securities.

Except as may otherwise be set forth in a prospectus supplement, the Trustee or the holders of not less than 33% in aggregate outstanding principal amount of any particular series of debt securities may declare the principal due and payable immediately upon an Event of Default with respect to such series. Holders of a majority in aggregate outstanding principal amount of such series may annul any such declaration and waive the default with respect to such series if the default has been cured and a sum sufficient to pay all matured installments of interest and principal otherwise than by acceleration and any premium has been deposited with the Trustee.

The holders of a majority in aggregate outstanding principal amount of any series of debt securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee for that series.

Subject to the provisions of the Base Indenture relating to the duties of the Trustee in case an Event of Default will occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Base Indenture at the request or direction of any of the holders of the debt securities, unless such holders will have offered to the Trustee indemnity satisfactory to it.

The holders of a majority in aggregate outstanding principal amount of any series of debt securities affected thereby may, on behalf of the holders of all debt securities of such series, waive any past default, except as discussed in the following paragraph.

The holders of a majority in aggregate outstanding principal amount of any series of debt securities affected thereby may not waive a default in the payment of principal, premium, if any, or interest when due otherwise than by

•acceleration, unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal otherwise than by acceleration and any premium has been deposited with the Trustee; or

•a call for redemption or any series of debt securities.

We are required to file annually with the trustee a certificate as to whether or not we are in compliance with all the conditions and covenants under the Base Indenture.

Discharge, Defeasance and Covenant Defeasance

Debt securities of any series may be defeased in accordance with their terms and, unless the supplemental indenture or company order establishing the terms of such series otherwise provides, as set forth below.

We at any time may terminate as to a series our obligations with respect to the debt securities of that series under any restrictive covenant which may be applicable to that particular series, commonly known as ‘‘covenant defeasance.’’ All of our other obligations would continue to be applicable to such series.

We at any time may also terminate as to a series substantially all of our obligations with respect to the debt securities of such series and the Base Indenture, commonly known as ‘‘legal defeasance.’’ However, in legal defeasance, certain of our obligations would not be terminated, including our obligations with respect to the defeasance trust and obligations to register the transfer or exchange of a security, to replace destroyed, lost or stolen debt securities and to maintain agencies in respect of the debt securities.

We may exercise our legal defeasance option notwithstanding our prior exercise of any covenant defeasance option.

If we exercise a defeasance option, the particular series will not be accelerated because of an event that, prior to such defeasance, would have constituted an Event of Default.

To exercise either of our defeasance options as to a series, we must irrevocably deposit in trust with the Trustee or any paying agent money, certain eligible obligations as specified in the Base Indenture, or a combination thereof, in an amount sufficient to pay when due the principal of and premium, if any, and interest, if any, due and to become due on the debt securities of such series that are outstanding.

Such defeasance or discharge may occur only if, among other things, we have delivered to the Trustee an opinion of counsel stating that:

•the holders of such debt securities will not recognize gain, loss or income for federal income tax purposes as a result of the satisfaction and discharge of the Base Indenture with respect to such series, and

•that such holders will realize gain, loss or income on such debt securities, including payments of interest thereon, in the same amounts and in the same manner and at the same time as would have been the case if such satisfaction and discharge had not occurred.

The amount of money and eligible obligations on deposit with the Trustee may not be sufficient to pay amounts due on the debt securities of that series at the time of an acceleration resulting from an Event of Default if:

•we exercise our option to effect a covenant defeasance with respect to the debt securities of any series, and

•the debt securities of that series are thereafter declared due and payable because of the occurrence of any Event of Default.

In such event, we would remain liable for such payments.

EX-13

Exhibit 13
Telephone and Data Systems, Inc.
Index	Page No.
Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Executive Overview	1
Terms used by TDS	3
Results of Operations – TDS Consolidated	5
UScellular Operations	10
TDS Telecom Operations	14
Wireline Operations	17
Cable Operations	21
Liquidity and Capital Resources	24
Consolidated Cash Flow Analysis	29
Consolidated Balance Sheet Analysis	30
Applications of Critical Accounting Policies and Estimates	31
Regulatory Matters	33
Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement	34
Market Risk	36
Supplemental Information Relating to Non-GAAP Financial Measures	37
Financial Statements	40
Consolidated Statement of Operations	40
Consolidated Statement of Comprehensive Income	41
Consolidated Statement of Cash Flows	42
Consolidated Balance Sheet – Assets	43
Consolidated Balance Sheet – Liabilities and Equity	44
Consolidated Statement of Changes in Equity	45
Notes to Consolidated Financial Statements	48
Reports of Management	82
Report of Independent Registered Public Accounting Firm	84
Shareholder Information	87

Telephone and Data Systems, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial statements and notes of Telephone and Data Systems, Inc. (TDS) for the year ended December 31, 2020, and with the description of TDS’ business included herein. Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers.

This report contains statements that are not based on historical facts, including the words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions. These statements constitute and represent “forward looking statements” as this term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward looking statements. See Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement for additional information.

TDS uses certain “non-GAAP financial measures” and each such measure is identified in the MD&A. A discussion of the reason TDS determines these metrics to be useful and reconciliations of these measures to their most directly comparable measures determined in accordance with accounting principles generally accepted in the United States of America (GAAP) are included in the Supplemental Information Relating to Non-GAAP Financial Measures section within the MD&A of this Form 10-K Report.

The following MD&A omits discussion of 2019 compared to 2018. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in TDS' Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 25, 2020, for that discussion.

General

TDS is a diversified telecommunications company that provides high-quality communications services to approximately 6 million connections nationwide. TDS provides wireless services through its 82%-owned subsidiary, United States Cellular Corporation (UScellular). TDS also provides wireline and cable services, through its wholly-owned subsidiary, TDS Telecommunications LLC (TDS Telecom). TDS operates entirely in the United States. See Note 19 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information about TDS’ segments.

The impact of the global spread of the coronavirus disease (COVID-19) on TDS' future operations is uncertain. There are many factors, including the severity and duration of the outbreak, as well as other direct and indirect impacts, that could impact TDS.

See the following areas within this MD&A for additional discussion of the direct and indirect impacts of COVID-19:

•Results of Operations — Income tax expense

•Business Overview — UScellular

•Operational Overview — UScellular

•Financial Overview — UScellular

•Business Overview — TDS Telecom

Also see the "Risk Factors" in TDS' Form 10-K for the year ended December 31, 2020 for risks related to COVID-19.

2020 Operating Revenues by Segment

1

TDS Mission and Strategy

TDS’ mission is to provide outstanding communications services to its customers and meet the needs of its shareholders, its people, and its communities. In pursuing this mission, TDS seeks to grow its businesses, create opportunities for its associates and employees, support the communities it serves, and build value over the long term for its shareholders. Across all of its businesses, TDS is focused on providing exceptional customer experiences through best-in-class services and products and superior customer service.

TDS’ long-term strategy calls for the majority of its operating capital to be reinvested in its businesses to strengthen their competitive positions and financial performance, while also returning value to TDS shareholders primarily through the payment of a regular quarterly cash dividend.

In 2020, TDS continued to focus on investing in the networks that are the backbone of its commitment to provide outstanding communications services to its customers. TDS believes these investments strengthen its competitive position and improve operating performance. TDS expects to continue to execute on its strategies to build strong, competitive businesses providing high-quality, data-focused services and products.

During 2020, TDS paid $78 million in regular quarterly cash dividends. TDS increased the dividend per share paid to its investors by 3% in 2020 which marks the 46th consecutive year of dividend increases and in February 2021, TDS increased its quarterly dividend per share from $0.170 to $0.175. During 2020, TDS repurchased 879,409 Common Shares for $14 million at an average cost per share of $15.53. As of December 31, 2020, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $185 million. There is no assurance that TDS will continue to increase the dividend rate or pay dividends and no assurance that TDS or UScellular will make any significant amount of share repurchases in the future.

2

Terms Used by TDS

The following is a list of definitions of certain industry terms that are used throughout this document:

▪4G LTE – fourth generation Long-Term Evolution, which is a wireless technology that enables more network capacity for more data per user as well as faster access to data compared to third generation (3G) technology.

▪5G – fifth generation wireless technology that helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency.

▪Account – represents an individual or business financially responsible for one or multiple associated connections. An account may include a variety of types of connections such as handsets and connected devices.

▪Alternative Connect America Cost Model (A-CAM) – a USF support mechanism for rate-of-return carriers, which provides revenue support through 2028. This support comes with an obligation to build defined broadband speeds to a certain number of locations.

▪Auctions 101, 102, 103, 105 and 107 – Auction 101 was an FCC auction of 28 GHz wireless spectrum licenses that started in November 2018 and concluded in January 2019. Auction 102 was an FCC auction of 24 GHz wireless spectrum licenses that started in March 2019 and concluded in May 2019. Auction 103 was an FCC auction of 37, 39, and 47 GHz wireless spectrum licenses that started in December 2019 and concluded in March 2020. Auction 105 was an FCC auction of 3.5 GHz wireless spectrum licenses that started in July 2020 and concluded in September 2020. Auction 107 is an FCC auction of 3.7-3.98 GHz wireless spectrum licenses that started in December 2020 and is not complete as of the date of this report.

▪Broadband Connections – refers to the number of Wireline customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies or the Cable billable number of lines into a building for high-speed data services.

▪Churn Rate – represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.

▪Connected Devices – non-handset devices that connect directly to the UScellular network. Connected devices include products such as tablets, wearables, modems, and hotspots.

▪Coronavirus Aid, Relief, and Economic Security (CARES) Act – economic relief package signed into law on March 27, 2020 to address the public health and economic impacts of COVID-19, including a variety of tax provisions.

▪DOCSIS – Data Over Cable Service Interface Specification is an international telecommunications standard that permits the addition of high-bandwidth data transfer to an existing cable TV (CATV) system. DOCSIS 3.1 is a system specification that increases data transmission rates.

▪EBITDA – refers to earnings before interest, taxes, depreciation, amortization and accretion and is used in the non-GAAP metric Adjusted EBITDA throughout this document. See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information.

▪Eligible Telecommunications Carrier (ETC) – designation by states for providing specified services in “high cost” areas which enables participation in universal service support mechanisms.

▪Fiber Out-of-Territory Builds – represents construction of facilities-based market expansions outside of TDS' incumbent local exchange carrier (ILEC) and Cable footprint.

▪Free Cash Flow – non-GAAP metric defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment. See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information.

▪Gross Additions – represents the total number of new connections added during the period, without regard to connections that were terminated during that period.

▪IPTV – internet protocol television.

▪Keep Americans Connected Pledge – voluntary FCC initiative, through June 30, 2020, in response to the COVID-19 pandemic to ensure that Americans do not lose their broadband or telephone connectivity as a result of the exceptional circumstance.

▪ManagedIP Connections – refers to the number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.

▪Net Additions (Losses) – represents the total number of new connections added during the period, net of connections that were terminated during that period.

▪OIBDA – refers to operating income before depreciation, amortization and accretion and is used in the non-GAAP metric Adjusted OIBDA throughout this document. See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information.

▪Postpaid Average Revenue per Account (Postpaid ARPA) – metric which is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

▪Postpaid Average Revenue per User (Postpaid ARPU) – metric which is calculated by dividing total postpaid service revenues by the average number of postpaid connections and by the number of months in the period.

▪Retail Connections – the sum of UScellular postpaid connections and UScellular prepaid connections.

▪Tax Act – refers to comprehensive federal tax legislation enacted on December 22, 2017, which made broad changes to the U.S. tax code. Now titled H.R.1, the Tax Act was originally identified as the Tax Cuts and Jobs Act of 2017.

▪Universal Service Fund (USF) – a system of telecommunications collected fees and support payments managed by the FCC intended to promote universal access to telecommunications services in the United States.

▪UScellular Connections – individual lines of service associated with each device activated by a customer. Connections include all types of devices that connect directly to the UScellular network.

3

▪Video Connections – represents the number of Wireline customers provided video services. For Cable, generally, a home or business receiving video programming counts as one video connection. In counting bulk residential or commercial connections, such as an apartment building or a hotel, connections are counted based on the number of units/rooms within the building receiving service.

▪Voice Connections – refers to the individual circuits connecting a customer to Wireline’s central office facilities that provide voice services or the Cable billable number of lines into a building for voice services. 

▪VoLTE – Voice over Long-Term Evolution is a technology specification that defines the standards and procedures for delivering voice communications and related services over 4G LTE networks.

▪Wireline Residential Revenue per Connection – metric which is calculated by dividing total Wireline residential revenue by the average number of Wireline residential connections and by the number of months in the period.

4

Results of Operations — TDS Consolidated

Year Ended December 31,	2020		2019		2020 vs. 2019
(Dollars in millions)
Operating revenues
UScellular	$	4,037	$	4,022	–
TDS Telecom	976		930		5	%
All other1	212		224		(6)	%
Total operating revenues	5,225		5,176		1	%
Operating expenses
UScellular	3,864		3,910		(1)	%
TDS Telecom	866		823		5	%
All other1	236		264		(11)	%
Total operating expenses	4,966		4,997		(1)	%
Operating income (loss)
UScellular	173		112		54	%
TDS Telecom	110		107		3	%
All other1	(24)		(40)		41	%
Total operating income	259		179		45	%
Investment and other income (expense)
Equity in earnings of unconsolidated entities	181		168		8	%
Interest and dividend income	15		29		(49)	%
Gain (loss) on investments	2		—		N/M
Interest expense	(168)		(165)		(2)	%
Other, net	(1)		—		N/M
Total investment and other income	29		32		(10)	%
Income before income taxes	288		211		36	%
Income tax expense	19		64		(71)	%
Net income	269		147		83	%
Less: Net income attributable to noncontrolling interests, net of tax	43		26		70	%
Net income attributable to TDS shareholders	$	226	$	121	86	%
Adjusted OIBDA (Non-GAAP)2	$	1,190	$	1,122	6	%
Adjusted EBITDA (Non-GAAP)2	$	1,385	$	1,319	5	%
Capital expenditures3	$	1,317	$	1,032	28	%

N/M - Percentage change not meaningful

1    Consists of corporate and other operations and intercompany eliminations.

2    Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

3    Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

Refer to individual segment discussions in this MD&A for additional details on operating revenues and expenses at the segment level.

Equity in earnings of unconsolidated entities

Equity in earnings of unconsolidated entities represents TDS’ share of net income from entities in which it has a noncontrolling interest and that are accounted for using the equity method. TDS’ investment in the Los Angeles SMSA Limited Partnership (LA Partnership) contributed pre-tax income of $82 million and $78 million in 2020 and 2019, respectively.

5

Income tax expense

The effective tax rate on Income before income taxes for 2020 was 6.4%. The effective tax rate includes the impact of federal and state tax, and is reduced significantly in 2020 due to the tax benefits of the CARES Act enacted on March 27, 2020.

The CARES Act provides retroactive eligibility of bonus depreciation on qualified improvement property put into service after December 31, 2017 and a 5-year carryback of net operating losses generated in years 2018-2020. As the statutory federal tax rate applicable to certain years within the carryback period is 35%, carryback to those years provides a tax benefit in excess of the current federal statutory rate of 21%, resulting in a reduction of income tax expense for the year ended December 31, 2020, and a projected cash refund in 2021 of taxes paid in prior years.

TDS’ effective tax rate on Income before income taxes for 2019 was 30.3%. The effective tax rate included the impact of federal and state tax, as well as other increases due primarily to nondeductible interest expense.

See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information.

Net income attributable to noncontrolling interests, net of tax

Year Ended December 31,	2020		2019
(Dollars in millions)
UScellular noncontrolling public shareholders’	$	40	$	23
Noncontrolling shareholders’ or partners’	3		3
Net income attributable to noncontrolling interests, net of tax	$	43	$	26

 

Net income attributable to noncontrolling interests, net of tax includes the noncontrolling public shareholders’ share of UScellular’s net income, the noncontrolling shareholders’ or partners’ share of certain UScellular subsidiaries’ net income and other TDS noncontrolling interests.

Earnings

(Dollars in millions)

Net income increased in 2020 due primarily to higher revenues, lower operating expenses and the impact of the CARES Act reducing income tax expense. Adjusted EBITDA increased in 2020 due primarily to higher revenues and lower operating expenses.

*Represents a non-GAAP financial measure. Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

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UScellular OPERATIONS

Business Overview

UScellular owns, operates, and invests in wireless markets throughout the United States. UScellular is an 82%-owned subsidiary of TDS. UScellular’s strategy is to attract and retain wireless customers through a value proposition comprised of a high-quality network, outstanding customer service, and competitive devices, plans, and pricing - all provided with a community focus.

OPERATIONS

▪Serves customers with 5.0 million connections including 4.4 million postpaid, 0.5 million prepaid and 0.1 million reseller and other connections

▪Operates in 21 states

▪Employs approximately 5,300 associates

▪4,271 owned towers

▪6,797 cell sites in service

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COVID-19 considerations

COVID-19 impacts on UScellular's business for 2020 include a reduction in certain components of service revenues and equipment sales, a reduction in advertising and sales promotion costs and a reduction in handset subscriber gross additions and defections. The impacts of COVID-19 could negatively affect UScellular’s results of operations, cash flows and financial position in future periods. The extent and duration of these impacts are uncertain due to many factors and could be material. Certain impacts on and actions by UScellular related to COVID-19 include, but are not limited to, the following:

•Taking action to keep associates safe, including implementing a work-from-home strategy for employees whose jobs can be performed remotely. In addition, to keep associates, customers, and communities safe, UScellular performs enhanced cleanings and provides associates with personal protective equipment to be worn during customer interactions. UScellular has also implemented a daily health check process for associates and requires social distancing and mask wearing in all company facilities, including stores. Throughout this period of change, UScellular has continued serving its customers and ensuring its wireless network remains fully operational.

•Participation in the FCC Keep Americans Connected Pledge, through June 30, 2020, to not turn-off service or charge late fees due to a customer’s inability to pay their bill due to circumstances related to COVID-19. This resulted in a reduction in non-pay defections, as well as reduced service revenues for the year ended December 31, 2020. During the third and fourth quarter of 2020, certain accounts that were part of the Pledge were terminated due to non-payment. Many of the remaining accounts that were on the Pledge are on payment arrangements of varying durations, and UScellular expects additional terminations due to non-payment in future periods.

•Waiving overage charges and certain other charges. This resulted in reduced service revenues for the year ended December 31, 2020.

•Supporting the communities in which UScellular operates. Through UScellular’s partnership with Boys & Girls Clubs, UScellular has contributed to the Boys & Girls Clubs’ COVID-19 Relief Fund to support children, families and communities. These funds are dispersed directly to more than 50 clubs in UScellular’s service regions to support the most immediate needs of youth in areas of importance such as providing food for children who rely on their Boys & Girls Clubs for their dinner, care for children of essential workers and first responders, and digital learning resources. UScellular also began exploring ways to leverage its assets, brand, partnerships, and resources to begin to close the digital divide and ensure all youth in its markets have reliable and fast internet access in school and at home.

•Recognizing income tax benefits associated with the enactment of the CARES Act. This legislation resulted in a reduction to income tax expense for the year ended December 31, 2020 and a projected cash refund in 2021 of taxes paid in prior years.

•Monitoring its supply chain to assess impacts to availability and costs of device inventory and network equipment and services, including monitoring the dependency on third parties to continue network related projects. At this time, UScellular expects to be able to meet customer demand for devices and services and to be able to continue its 4G LTE network modernization and 5G deployment with no significant disruptions.

•UScellular is tracking customer usage and, at this time, believes network capacity is sufficient to accommodate expected usage.

•Monitoring roaming behaviors. Both inbound and outbound roaming traffic have been dampened by COVID-19 as wireless customers are reducing travel. The extent to which roaming traffic will be impacted by the pandemic in the future will depend upon governmental mandates and customer behavior in response to the outbreak.

UScellular Mission and Strategy

UScellular’s mission is to provide exceptional wireless communication services which enhance consumers’ lives, increase the competitiveness of local businesses, and improve the efficiency of government operations in the markets UScellular serves.

UScellular’s strategy is to attract and retain customers through a value proposition comprising a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a community focus. Strategic efforts include:

▪UScellular offers economical and competitively priced service plans and devices to its customers and is focused on increasing revenues from sales of related products such as accessories and device protection plans and from new services such as home internet. In addition, UScellular is focused on expanding its solutions available to business and government customers.

▪UScellular continues to devote efforts to enhance its network capabilities. UScellular has completed its deployment of VoLTE technology. VoLTE technology allows customers to utilize a 4G LTE network for both voice and data services and offers enhanced services such as high definition voice and simultaneous voice and data sessions.

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▪5G technology helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. UScellular's 5G deployment is initially focused on mobility services using its low band spectrum. UScellular has acquired high band spectrum, which it will deploy in the future to further enable the delivery of 5G services. UScellular has launched commercial 5G services in portions of California, Illinois, Iowa, Kansas, Maine, Maryland, Missouri, Nebraska, New Hampshire, North Carolina, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin and will continue to launch in additional areas in the coming years. In addition to the deployment of 5G technology, UScellular is also modernizing its 4G LTE network to further enhance 4G LTE speeds.

▪UScellular assesses its existing wireless interests on an ongoing basis with a goal of improving the competitiveness of its operations and maximizing its long-term return on capital. As part of this strategy, UScellular actively seeks attractive opportunities to acquire wireless spectrum, including pursuant to FCC auctions such as Auctions 103, 105 and 107.

9

Operational Overview

As of December 31,	2020	2019
Retail Connections – End of Period
Postpaid	4,412,000	4,383,000
Prepaid	499,000	506,000
Total	4,911,000	4,889,000

Year Ended December 31,	2020		2019		2020 vs. 2019
Postpaid Activity and Churn
Gross Additions
Handsets	397,000		458,000		(13)	%
Connected Devices	203,000		148,000		37	%
Total Gross Additions	600,000		606,000		(1)	%
Net Additions (Losses)
Handsets	(13,000)		(24,000)		46	%
Connected Devices	39,000		(65,000)		N/M
Total Net Additions (Losses)	26,000		(89,000)		N/M
Churn
Handsets	0.89	%	1.04	%
Connected Devices	2.58	%	3.24	%
Total Churn	1.09	%	1.31	%

N/M - Percentage change not meaningful

Total postpaid handset net losses decreased in 2020 due primarily to lower handset defections as a result of lower consumer switching activity related to COVID-19, as well as a reduction in non-pay defections. Partially offsetting the decrease in defections were lower gross additions resulting from lower consumer switching activity.

Total postpaid connected device net additions increased in 2020 due primarily to (i) an increase in gross additions due to higher demand for internet related products given a need for remote connectivity related to COVID-19 and (ii) a decrease in tablet defections.

Postpaid Revenue

Year Ended December 31,	2020		2019		2020 vs. 2019
Average Revenue Per User (ARPU)	$	47.01	$	46.01	2%
Average Revenue Per Account (ARPA)	$	122.93	$	119.80	3%

Postpaid ARPU and Postpaid ARPA increased in 2020, due primarily to (i) an increase in device protection plan revenues, (ii) an increase in regulatory recovery revenues, and (iii) having proportionately fewer tablet connections, which on a per-unit basis contribute less revenue than other connected devices and smartphones. These increases were partially offset by the impact of waiving overage charges and late payment and related fees, measures UScellular took to assist customers during 2020 related to the COVID-19 pandemic.

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Financial Overview — UScellular

Year Ended December 31,	2020		2019		2020 vs. 2019
(Dollars in millions)
Retail service	$	2,686	$	2,650	1	%
Inbound roaming	152		174		(13)	%
Other	229		211		8	%
Service revenues	3,067		3,035		1	%
Equipment sales	970		987		(2)	%
Total operating revenues	4,037		4,022		–
System operations (excluding Depreciation, amortization and accretion reported below)	782		756		3	%
Cost of equipment sold	1,011		1,028		(2)	%
Selling, general and administrative	1,368		1,406		(3)	%
Depreciation, amortization and accretion	683		702		(3)	%
(Gain) loss on asset disposals, net	25		19		36	%
(Gain) loss on sale of business and other exit costs, net	—		(1)		N/M
(Gain) loss on license sales and exchanges, net	(5)		—		N/M
Total operating expenses	3,864		3,910		(1)	%
Operating income	$	173	$	112	54	%
Net income	$	233	$	133	76	%
Adjusted OIBDA (Non-GAAP)1	$	876	$	832	5	%
Adjusted EBITDA (Non-GAAP)1	$	1,063	$	1,015	5	%
Capital expenditures2	$	940	$	710	32	%

N/M - Percentage change not meaningful

1    Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

2    Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

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Operating Revenues

(Dollars in millions)

Service revenues consist of: 

▪Retail Service – Charges for voice, data and value added services and recovery of regulatory costs

▪Inbound Roaming – Charges to other wireless carriers whose customers use UScellular’s wireless systems when roaming

▪Other Service – Amounts received from the Federal USF, tower rental revenues, and miscellaneous other service revenues

Equipment revenues consist of:

▪Sales of wireless devices and related accessories to new and existing customers, agents, and third-party distributors

Key components of changes in the statement of operations line items were as follows:

Total operating revenues

Retail service revenues increased in 2020, primarily as a result of an increase in Postpaid ARPU as previously discussed in the Operational Overview section, partially offset by a decline in the average number of postpaid subscribers.

Inbound roaming revenues decreased in 2020, primarily driven by lower data revenues, with lower rates partially offset by higher usage. UScellular expects inbound roaming revenues to continue to decline as a result of a decrease in rates, and the merger of Sprint and T-Mobile.

Other service revenues increased in 2020, resulting from increases in tower rental revenues and miscellaneous other service revenues.

Equipment sales revenues decreased in 2020, due primarily to a decrease in new smartphone and accessory sales, partially offset by an increase in used smartphone sales.

System operations expenses

System operations expenses increased in 2020, due to increased cell site rent expense, non-capitalizable costs to add network capacity and costs to decommission network assets.

Cost of equipment sold

Cost of equipment sold decreased in 2020, due primarily to a decrease in new smartphone and accessory sales, partially offset by an increase in used smartphone and connected device sales.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased in 2020, due primarily to decreases in (i) bad debts expense driven by fewer non-pay customers as a result of better credit mix and improved customer payment behavior and (ii) advertising expense due to reduced sponsorship expense from cancelled events related to COVID-19.

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Depreciation, amortization and accretion

Depreciation, amortization, and accretion decreased in 2020, due to certain billing system assets reaching their end of life, partially offset by higher depreciation due to increased capital expenditures and accelerated depreciation of certain assets due to changes in network technology.

(Gain) loss on asset disposals, net

Loss on asset disposals, net increased in 2020 due primarily to higher disposal of used equipment.

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TDS TELECOM OPERATIONS

Business Overview

TDS Telecom provides a wide range of communications services to residential and commercial customers. TDS Telecom operates in two segments: Wireline, which includes a fiber-to-the-home program in new markets, and Cable. 

TDS Telecom has a common strategy across all its businesses to provide high-speed broadband services bundled with video and voice services. Services are provided to residential, commercial, and wholesale customers in a mix of rural, suburban and metropolitan communities, with the largest concentration of its customers in the Upper Midwest and the Southeast. TDS Telecom seeks to be the leading provider of broadband services in the markets it serves by investing into high-quality networks and providing excellent customer service.

On December 31, 2019, TDS acquired substantially all of the assets of MI Connection Communications System, dba Continuum. Continuum is a cable company that passes approximately 40,000 service addresses in North Carolina and offers complementary broadband, video and voice services.

OPERATIONS

▪Serves 1.2 million connections in 32 states.

▪Employs approximately 2,900 employees.

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COVID-19 considerations

The future impacts of COVID-19 are uncertain due to many factors and could be material to TDS Telecom's results of operations, cash flows and financial position. Certain impacts on and actions by TDS Telecom related to COVID-19 include, but are not limited to, the following:

•Taking action to keep employees safe, including implementing a work-from-home policy for employees whose jobs can be performed remotely. In addition, to keep employees, customers, and communities safe, TDS Telecom closed certain retail stores and temporarily ceased door-to-door selling. Retail stores that remain open have implemented social distancing and enhanced cleaning measures. In addition, TDS Telecom has expanded safety protocols for front line workers, such as field service technicians and direct salesforce employees as they returned to door-to-door selling in the second quarter. Throughout this period of change, TDS Telecom has continued serving its customers and ensuring its network remains fully operational.

•Participation in the FCC Keep Americans Connected Pledge, through June 30, 2020, to not turn-off service or charge late fees due to a customer's inability to pay their bill due to circumstances related to COVID-19. TDS Telecom is complying with certain states that have extended no-disconnect orders past the expiration of the FCC Pledge. These actions did not have a significant financial impact for the year ended December 31, 2020.

•Supporting the communities in which TDS Telecom operates. TDS Telecom has donated to food pantries and other organizations that are serving the needs of the communities in which it operates.

•Offering 60 days of free broadband service to new customers who are low-income and/or families with children or college age students through April 2020, with free services ending in June 2020.

•Recognizing income tax benefits associated with the enactment of the CARES Act. This legislation resulted in a reduction to income tax expense for 2020 and a cash refund of taxes paid in prior years.

•Tracking increased customer demand for broadband services. The demand may fluctuate depending on the severity and duration of the pandemic. At this time, TDS Telecom's network capacity has been sufficient for increased usage.

•Door-to-door sales activities in out-of-territory markets were initially impacted by the pandemic leading to a broadened approach that uses increasing online sales and marketing activities. A significant reduction in pre-sales activity could result in a slowing of construction activity.

•Monitoring its supply chain to assess impacts to availability of network equipment. At this time, TDS Telecom expects to be able to meet customer demand for on-premise equipment, and to maintain its expected investment levels in fiber and other broadband deployments.

•Monitoring the dependency on third parties to continue work on out-of-territory market construction. Various state municipal and vendor restrictions related to COVID-19 could cause delays in municipal permitting, pole access, and other contractor work that could slow down construction plans.

TDS Telecom Mission and Strategy

TDS Telecom's mission is to provide outstanding communications services to delight its customers, champion economic development by investing in infrastructure, and to grow rapidly.

TDS Telecom's strategic efforts include:

▪TDS Telecom strives to be the preferred broadband provider in its markets with the ability to provide value-added bundling services with video and voice service options. TDS Telecom continues to focus on driving growth in its broadband services by investing in fiber deployment in TDS' new out-of-territory markets and in existing markets.

▪TDS Telecom may also seek to grow its operations through the acquisition of businesses that support and complement its existing markets or create entirely new clusters of markets where TDS Telecom can succeed. TDS Telecom intends to avoid markets served by other fiber overbuilders or municipalities which have constructed their own networks with fiber to the home.

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Financial Overview — TDS Telecom

Year Ended December 31,	2020		2019		2020 vs. 2019
(Dollars in millions)
Operating revenues
Wireline	$	685	$	683	–
Cable	292		247		18	%
TDS Telecom operating revenues1	976		930		5	%
Operating expenses
Wireline	593		587		1	%
Cable	274		236		16	%
TDS Telecom operating expenses1	866		823		5	%
TDS Telecom operating income	$	110	$	107	3	%
Net income	$	100	$	92	8	%
Adjusted OIBDA (Non-GAAP)2	$	314	$	300	4	%
Adjusted EBITDA (Non-GAAP)2	$	317	$	313	1	%
Capital expenditures3	$	368	$	316	16	%

Numbers may not foot due to rounding.

1    Includes eliminations between the Wireline and Cable segments.

2    Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

3    Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

Operating Revenues

(Dollars in millions)

Operating revenues increased in 2020 due primarily to the acquisition of Continuum, Wireline and Cable broadband growth and Wireline video growth which were partially offset by declines in Wireline residential voice and commercial revenues.

Total operating expenses

Operating expenses increased in 2020 due primarily to expenses related to the addition of Continuum, increases in building and maintenance costs, higher video programming costs, and a gain on the sale of assets in 2019, partially offset by a decrease related to the change in accounting to capitalize modems.

16

WIRELINE OPERATIONS

Operational Overview

Residential Connections

As of December 31,

Total residential connections increased 4% as growth in broadband and video connections grew 9% and 8%, respectively, partially offset by a 2% decline in voice connections.

Residential Broadband Connections by Speeds1

As of December 31,

Residential broadband customers continue to choose higher speeds with 75% taking speeds of 10 Mbps or greater and 40% choosing speeds of 100 Mbps or greater.

1    Includes ILEC and out-of-territory

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Residential Revenue per Connection

For the year ended December 31,

Residential revenue per connection increased 4% due to growth in broadband and video connections, which are priced higher than declining voice services, and price increases. Video and broadband services also have tiered pricing depending on the packages and speeds the customer selects.

Commercial Connections

As of December 31,

Total commercial connections decreased by 8% due primarily to declines in connections in competitive local exchange carrier (CLEC) markets.

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Financial Overview — Wireline

Year Ended December 31,	2020		2019		2020 vs. 2019
(Dollars in millions)
Residential	$	349	$	328	6	%
Commercial	152		168		(9)	%
Wholesale	182		186		(2)	%
Service revenues	684		682		–
Equipment and product sales	1		1		(31)	%
Total operating revenues	685		683		–
Cost of services (excluding Depreciation, amortization and accretion reported below)	269		263		2	%
Cost of equipment and products	1		1		(36)	%
Selling, general and administrative	199		199		–
Depreciation, amortization and accretion	124		132		(6)	%
(Gain) loss on asset disposals, net	—		(8)		N/M
Total operating expenses	593		587		1	%
Operating income	$	92	$	96	(4)	%
Income before income taxes	$	99	$	110	(10)	%
Adjusted OIBDA (Non-GAAP)1	$	217	$	220	(1)	%
Adjusted EBITDA (Non-GAAP)1	$	220	$	231	(5)	%
Capital expenditures2	$	293	$	243	20	%

Numbers may not foot due to rounding.

N/M - Percentage change not meaningful

1    Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

2    Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

19

Operating Revenues

(Dollars in millions)

Residential revenues consist of:

▪Broadband services, including fiber- and copper-based high-speed internet, security and support services

▪Video services, including IPTV and satellite offerings

▪Voice services

Commercial revenues consist of:

▪High-speed and dedicated business internet services

▪Video services

▪Voice services

Wholesale revenues consist of:

▪Network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom’s network

▪Federal and state USF support, including A-CAM

Key components of changes in the statement of operations items were as follows:

Total operating revenues

Residential revenues increased in 2020 due primarily to growth in broadband and video connections, as well as price increases, partially offset by a decline in voice connections.

Commercial revenues decreased in 2020 due primarily to declining connections in CLEC markets.

Wholesale revenues decreased in 2020 due primarily to decreased access revenues.

Cost of services

Cost of services increased slightly in 2020 due primarily to increases in building and maintenance costs, higher video programming costs, partially offset by a decrease in expenses related to the capitalization of new modems. Effective January 1, 2020, the cost of modems, along with associated installation costs, is being capitalized.

Selling, general and administrative

Selling, general and administrative expenses remained flat in 2020 due primarily to lower legal and consulting costs, offset by increases in advertising costs in the out-of-territory markets.

Depreciation, amortization and accretion

Depreciation, amortization and accretion decreased in 2020 due primarily to certain assets becoming fully depreciated and extended useful lives assumptions, partially offset by depreciation on new fiber assets.

(Gain) loss on asset disposals, net

Gain on asset disposals decreased in 2020 due to the sale of fiber assets in certain CLEC markets during 2019.

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CABLE OPERATIONS

Operational Overview

Residential Connections

As of December 31,

Total residential connections grew 3% in 2020 due to a 8% increase in broadband connections, partially offset by a 6% decline in video connections and a 3% decline in voice connections.

Commercial Connections

As of December 31,

Total commercial connections decreased 2% in 2020 due to declining voice and video connections, partially offset by an increase in broadband and managedIP connections.

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Financial Overview — Cable

Year Ended December 31,	2020		2019		2020 vs. 2019
(Dollars in millions)
Residential	$	245	$	205	20	%
Commercial	47		43		10	%
Total operating revenues	292		247		18	%
Cost of services (excluding Depreciation, amortization and accretion reported below)	123		105		17	%
Selling, general and administrative	72		62		16	%
Depreciation, amortization and accretion	78		68		15	%
(Gain) loss on asset disposals, net	1		1		(26)	%
Total operating expenses	274		236		16	%
Operating income (loss)	$	18	$	11	60	%
Income (loss) before income taxes	$	18	$	13	43	%
Adjusted OIBDA (Non-GAAP)1	$	97	$	80	21	%
Adjusted EBITDA (Non-GAAP)1	$	97	$	82	19	%
Capital expenditures2	$	75	$	73	2	%

Numbers may not foot due to rounding.

1    Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

2    Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

Operating Revenues

(Dollars in millions)

Residential and Commercial revenues consist of:

▪Broadband services, including high-speed internet, security and support services

▪Video services, including IPTV and traditional cable programming

▪Voice services

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Key components of changes in the statement of operations items were as follows:

Total operating revenues

Residential and commercial revenues increased in 2020 due primarily to the acquisition of Continuum ($22 million) as well as growth in broadband connections and price increases.

Cost of services

Cost of services increased in 2020 due primarily to the acquisition of Continuum ($13 million) and increases in employee-related expenses.

Selling, general and administrative

Selling, general and administrative expenses increased in 2020 due primarily to increases in employee-related expenses and the acquisition of Continuum ($2 million).

Depreciation, amortization and accretion

Depreciation, amortization and accretion increased in 2020 due primarily to the acquisition of Continuum ($11 million).

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Liquidity and Capital Resources

Sources of Liquidity

TDS and its subsidiaries operate capital-intensive businesses. In the past, TDS’ existing cash and investment balances, funds available under its revolving credit and receivables securitization agreements, funds from other financing sources, including term loans and other long-term debt, and cash flows from operating and certain investing and financing activities, including sales of assets or businesses, provided sufficient liquidity and financial flexibility for TDS to meet its normal day-to-day operating needs and debt service requirements, to finance the build-out and enhancement of markets and to fund acquisitions. There is no assurance that this will be the case in the future. See Market Risk for additional information regarding maturities of long-term debt.

TDS has incurred negative free cash flow at times in the past and this could occur in the future. However, TDS believes that existing cash and investment balances, funds available under its revolving credit, term loan and receivables securitization agreements, expected future tax refunds and expected cash flows from operating and investing activities will provide sufficient liquidity for TDS to meet its normal day-to-day operating needs and debt service requirements for the coming years. TDS will continue to monitor the rapidly changing business and market conditions and plans to take appropriate actions, as necessary, to meet its liquidity needs.

TDS may require substantial additional capital for, among other uses, funding day-to-day operating needs including working capital, acquisitions of providers of cable, wireless or wireline telecommunications services, IT services or other businesses, wireless spectrum license or system acquisitions, capital expenditures, agreements to purchase goods or services, leases, debt service requirements, the repurchase of shares, the payment of dividends, or making additional investments, including new technologies and out-of-territory fiber builds. It may be necessary from time to time to increase the size of the existing revolving credit agreements, to put in place new credit agreements, or to obtain other forms of financing in order to fund potential expenditures. 

Cash and Cash Equivalents

Cash and cash equivalents include cash and money market investments. The primary objective of TDS’ Cash and cash equivalents investment activities is to preserve principal. TDS does not have direct access to UScellular cash.

Cash and Cash Equivalents

(Dollars in millions)

The majority of TDS’ Cash and cash equivalents are held in bank deposit accounts and in money market funds that purchase only debt issued by the U.S. Treasury or U.S. government agencies.

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Financing

Revolving Credit Agreements

In March 2020, TDS entered into a new $400 million unsecured revolving credit agreement with certain lenders and other parties and UScellular entered into a new $300 million unsecured revolving credit agreement with certain lenders and other parties. Amounts under the new revolving credit agreements may be borrowed, repaid and reborrowed from time to time until maturity in March 2025. As a result of the new agreements, TDS' and UScellular's previous revolving credit agreements due to expire in May 2023 were terminated. As of December 31, 2020, there were no outstanding borrowings under the revolving credit agreements, except for letters of credit, and TDS and UScellular’s unused borrowing capacity was $399 million and $298 million, respectively.

Term Loan Agreements

In January 2020, TDS entered into an unsecured $200 million senior term loan credit agreement. In March 2020, TDS amended the agreement to conform the agreement with its revolving credit agreement. The term loan may be drawn in one or more advances by the one-year anniversary of the date of the agreement; amounts not drawn by that time will cease to be available. The maturity date of the term loan is in January 2027. As of December 31, 2020, the outstanding borrowings under the agreement were $125 million and the unused borrowing capacity was $75 million. In January 2021, TDS borrowed an additional $75 million under the senior term loan credit agreement.

In March 2020, UScellular amended its unsecured senior term loan credit agreement in order to conform the agreement with its revolving credit agreement. In June 2020, UScellular amended and restated the agreement and increased its borrowing capacity to $300 million. The term loan may be drawn in one or more advances by the one-year anniversary of the date of the agreement; amounts not drawn by that time will cease to be available. The maturity date of the term loan is in June 2027. As of December 31, 2020, the outstanding borrowings under the agreement were $83 million and the unused borrowing capacity was $217 million.

Receivables Securitization Agreement

In April 2020, UScellular borrowed $125 million under its receivables securitization agreement. In October 2020, UScellular amended and restated its agreement to increase its total borrowing capacity to $300 million. Amounts under the receivables securitization agreement may be borrowed, repaid and reborrowed from time to time until maturity in December 2022, which may be extended from time to time as specified therein. In December 2020, UScellular repaid $100 million of the outstanding borrowing. As of December 31, 2020, the outstanding borrowings under the agreement were $25 million and the unused capacity was $275 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement. 

Financial Covenants

The TDS and UScellular revolving credit agreements, senior term loan agreements and the UScellular receivables securitization agreement require TDS or UScellular, as applicable, to comply with certain affirmative and negative covenants, which include certain financial covenants. In particular, under these agreements, TDS and UScellular are required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. TDS and UScellular also were required to maintain the Consolidated Leverage Ratio at a level not to exceed 3.25 to 1.00 as of the end of any fiscal quarter. TDS and UScellular believe they were in compliance as of December 31, 2020 with all such financial covenants. 

Other Long-Term Financing

In August 2020, UScellular issued $500 million of 6.25% Senior Notes due in 2069 and in December 2020, UScellular issued $500 million of 5.5% Senior Notes due in 2070. The proceeds from both issuances will be used for general corporate purposes, which may include the repayment of other debt, the purchase of additional spectrum and the funding of capital expenditures, including in connection with 5G buildout projects.

TDS and UScellular each have an effective shelf registration statement on Form S-3 to issue senior or subordinated debt securities. The proceeds from any such issuances may be used for general corporate purposes, including the possible reduction of other short-term or long-term debt; spectrum purchases; capital expenditures; acquisition, construction and development programs; working capital; additional investments in subsidiaries; or the repurchase of shares. The TDS shelf registration permits TDS to issue at any time and from time to time senior or subordinated debt securities in one or more offerings in an indeterminate amount. The UScellular shelf registration statement permits UScellular to issue at any time and from time to time senior or subordinated debt securities in one or more offerings, up to the amount registered, which is currently $500 million. The ability of TDS or UScellular to complete an offering pursuant to such shelf registration statements is subject to market conditions and other factors at the time.

TDS believes that it and/or its subsidiaries were in compliance as of December 31, 2020, with all covenants and other requirements set forth in the TDS and UScellular long-term debt indentures. TDS and UScellular have not failed to make nor do they expect to fail to make any scheduled payment of principal or interest under such indentures.

Refer to Market Risk — Long-Term Debt for additional information regarding required principal payments and the weighted average interest rates related to TDS’ Long-term debt.

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TDS and UScellular, at their discretion, may from time to time seek to retire or purchase their outstanding debt through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

See Note 12 — Debt in the Notes to Consolidated Financial Statements for additional information regarding the revolving credit agreements, senior term loan agreements, UScellular's receivables securitization agreement, UScellular's Senior Notes and other long-term financing.

Credit Ratings

In certain circumstances, TDS’ and UScellular’s interest cost on their various agreements may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. The agreements do not cease to be available nor do the maturity dates accelerate solely as a result of a downgrade in TDS’ or UScellular’s credit rating. However, downgrades in TDS’ or UScellular’s credit rating could adversely affect their ability to renew the agreements or obtain access to other credit agreements in the future.

TDS and UScellular are rated at sub-investment grade. TDS and UScellular’s credit ratings as of December 31, 2020, and the dates such ratings were re-affirmed were as follows:

Rating Agency	Rating	Outlook
Moody's (TDS) (re-affirmed October 2020)	Ba2	stable outlook
Moody's (UScellular) (re-affirmed October 2020)	Ba1	stable outlook
Standard & Poor's (re-affirmed October 2020)	BB	stable outlook
Fitch Ratings (re-affirmed June 2020)	BB+	stable outlook

Capital Requirements

The discussion below is intended to highlight some of the significant cash outlays expected during 2021 and beyond and to highlight the spending incurred in prior years for these items. This discussion does not include cash required to fund normal operations, and is not a comprehensive list of capital requirements. Significant cash requirements that are not routine or in the normal course of business could arise from time to time.

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Capital Expenditures

TDS makes substantial investments to acquire, construct and upgrade telecommunications networks and facilities to remain competitive and as a basis for creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities (such as 5G and VoLTE technology in the Wireless business and fiber in the Wireline business) have required substantial investments in potentially revenue-enhancing and cost-saving upgrades to TDS’ networks to remain competitive; this is expected to continue in 2021 and future years with the continued deployment of 5G technology in the Wireless business, and the continued deployment of fiber in the Wireline business.

Capital expenditures (i.e., additions to property, plant and equipment and system development expenditures; excludes wireless spectrum license additions), which include the effects of accruals and capitalized interest, in 2020 and 2019 were as follows:

Capital Expenditures

(Dollars in millions)

UScellular’s capital expenditures in 2020 were $940 million compared to $710 million in 2019. In 2020, UScellular's capital expenditures were used for the following purposes:

▪Enhance and maintain UScellular's network coverage, including continuing deployment of VoLTE technology and providing additional speed and capacity to accommodate increased data usage by current customers;

▪Continue network modernization and 5G deployment; and

▪Invest in information technology to support existing and new services and products.

Capital expenditures for 2021 are expected to be between $775 million and $875 million. UScellular will continue to incur spend in 2021 related to its multi-year 5G deployment and network modernization initiatives.

TDS Telecom’s capital expenditures in 2020 were $368 million compared to $316 million in 2019. In 2020, these capital expenditures were used for the following purposes:

•Continue to expand fiber deployment inside and outside of current footprint;

•Maintain and enhance existing infrastructure including build-out requirements to meet state broadband and A-CAM programs;

•Upgrade broadband capacity and speeds;

•Support success-based spending for broadband and video growth; and

•Deploy TDS TV+, a cloud-based video platform.

Capital expenditures for 2021 are expected to be between $425 million and $475 million. These expenditures are expected to be used for similar purposes as those listed above.

TDS intends to finance its capital expenditures for 2021 using primarily Cash flows from operating activities, existing cash balances and, if required, additional debt financing from its receivables securitization agreement, senior term loan credit agreements, revolving credit agreements and/or other forms of financing. 

Acquisitions, Divestitures and Exchanges

TDS may be engaged from time to time in negotiations (subject to all applicable regulations) relating to the acquisition, divestiture or exchange of companies, properties, wireless spectrum licenses (including pursuant to FCC auctions) and other possible businesses. In general, TDS may not disclose such transactions until there is a definitive agreement.

Subsequent to December 31, 2020, UScellular committed to purchase wireless spectrum licenses for approximately $1,460 million inclusive of associated costs, subject to regulatory approval. UScellular believes its cash balances, existing debt facilities, and other financing sources as described above are sufficient to meet this commitment.

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Other Obligations

TDS will require capital for future spending on existing contractual obligations, including long-term debt obligations; operating lease and finance lease commitments; commitments for device purchases, network facilities and transport services; agreements for software licensing; long-term marketing programs; and other agreements to purchase goods or services.

Variable Interest Entities

TDS consolidates certain “variable interest entities” as defined under GAAP. See Note 15 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information related to these variable interest entities. TDS may elect to make additional capital contributions and/or advances to these variable interest entities in future periods in order to fund their operations. 

Common Share Repurchase Programs

During 2020, TDS repurchased 879,409 Common Shares for $14 million at an average cost per share of $15.53. As of December 31, 2020, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $185 million.

During 2020, UScellular repurchased 803,836 Common Shares for $23 million at an average cost per share of $29.00. At December 31, 2020, the total cumulative amount of UScellular Common Shares authorized to be purchased is 4,507,000.

Depending on its future financial performance, construction, development and acquisition programs, and available sources of financing, TDS and UScellular may not have sufficient liquidity or capital resources to make share repurchases. Therefore, there is no assurance that TDS and UScellular will make any share repurchases in the future. 

For additional information related to the current TDS and UScellular repurchase authorizations, see Note 17 — Common Shareholders’ Equity in the Notes to Consolidated Financial Statements.

Off-Balance Sheet Arrangements

TDS had no transactions, agreements or other contractual arrangements with unconsolidated entities involving “off-balance sheet arrangements,” as defined by SEC rules, that had or are reasonably likely to have a material current or future effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources.

Dividends

TDS paid quarterly dividends per outstanding share of $0.170 in 2020 and $0.165 in 2019. TDS increased the dividend per share to $0.175 in the first quarter of 2021. TDS has no current plans to change its policy of paying dividends.

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Consolidated Cash Flow Analysis

TDS operates a capital-intensive business. TDS makes substantial investments to acquire wireless spectrum licenses and properties and to construct and upgrade communications networks and facilities as a basis for creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to TDS’ networks. Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, the timing of acquisitions and divestitures, capital expenditures and other factors. The following discussion summarizes TDS’ cash flow activities in 2020 and 2019.

2020 Commentary

TDS’ Cash, cash equivalents and restricted cash increased $978 million. Net cash provided by operating activities was $1,532 million due primarily to net income of $269 million adjusted for non-cash items of $1,071 million and distributions received from unconsolidated entities of $189 million, including $89 million in distributions from the LA Partnership.

Cash flows used for investing activities were $1,511 million. Cash paid for additions to property, plant and equipment totaled $1,338 million. Cash payments for wireless spectrum license acquisitions, including advanced payments, were $201 million.

Cash flows provided by financing activities were $957 million, reflecting the issuance of $500 million of 5.50% UScellular Senior Notes, $500 million of 6.25% UScellular Senior Notes, $125 million borrowed under the UScellular receivables securitization agreement, and $125 million borrowed under the TDS term loan. These were partially offset by a $100 million repayment on the UScellular receivables securitization agreement, the payment of dividends totaling $78 million, the payment of debt issuance costs of $41 million, and the repurchase of TDS and UScellular Common Shares.

2019 Commentary

TDS’ Cash, cash equivalents and restricted cash decreased $453 million. Net cash provided by operating activities was $1,016 million due to net income of $147 million plus non-cash items of $984 million and distributions received from unconsolidated entities of $162 million, including $75 million in distributions from the LA Partnership. This was offset by changes in working capital items which decreased net cash by $277 million. The more significant working capital changes were increases in accounts receivables and equipment installment plan receivables and a decrease in accounts payable.

Cash flows used for investing activities were $1,249 million. Cash paid for additions to property, plant and equipment totaled $957 million and Cash paid for acquisitions and licenses totaled $346 million. This was partially offset by cash received from the redemption of short-term Treasury bills of $29 million and Cash received from divestitures and exchanges of $41 million.

Cash flows used for financing activities were $220 million, reflecting a $100 million principal prepayment on the UScellular senior term loan, the repurchase of $21 million of UScellular Common Shares and ordinary activity such as the payment of dividends and the scheduled repayments of debt.

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Consolidated Balance Sheet Analysis

The following discussion addresses certain captions in the consolidated balance sheet and changes therein. This discussion is intended to highlight the significant changes and is not intended to fully reconcile the changes. Changes in financial condition during 2020 were as follows:

Income taxes receivable

Income taxes receivable increased $151 million primarily reflecting future tax refunds attributable to the carryback of 2020 net operating losses, as allowed under the CARES Act which was enacted in March 2020. See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information.

Accounts payable

Accounts payable increased $134 million due primarily to software license and network equipment spending.

Accrued taxes

Accrued taxes increased $28 million due primarily to an increase in accrued payroll taxes.

Deferred income tax liability, net

Deferred income tax liability, net increased $187 million due primarily to full deductibility for tax purposes of qualified property placed in service during 2020. See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information.

Long-term debt, net

Long-term debt, net increased $1,108 million due primarily to UScellular's issuance of $500 million of 5.50% Senior Notes and $500 million of 6.25% Senior Notes, and $125 million borrowed under the TDS term loan. See Note 12 — Debt in the Notes to Consolidated Financial Statements for additional information.

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Application of Critical Accounting Policies and Estimates

TDS prepares its consolidated financial statements in accordance with GAAP. TDS’ significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements, Note 2 — Revenue Recognition and Note 10 — Leases in the Notes to Consolidated Financial Statements.

Management believes the application of the following critical accounting policies and the estimates required by such application reflect its most significant judgments and estimates used in the preparation of TDS’ consolidated financial statements.

Intangible Asset Impairment

Licenses and Goodwill represent a significant component of TDS’ consolidated assets. These assets are considered to be indefinite-lived assets and, therefore, are not amortized but rather are tested at least annually for impairment. TDS performs annual impairment testing of Licenses and Goodwill as of November 1 of each year, or more frequently if triggering events occur. Significant negative events, such as changes in any of the assumptions described below or decreases in forecasted cash flows, could result in an impairment in future periods. Licenses are tested for impairment at the level of reporting referred to as a unit of accounting. Goodwill is tested for impairment at the level of reporting referred to as a reporting unit.

See Note 7 — Intangible Assets in the Notes to Consolidated Financial Statements for information related to Licenses and Goodwill activity in 2020 and 2019.

Wireless Spectrum Licenses – UScellular

For purposes of its impairment testing, UScellular separates its FCC wireless spectrum licenses into eight units of accounting, which consist of one unit of accounting for developed operating market wireless spectrum licenses (built wireless spectrum licenses) and seven geographic non-operating market wireless spectrum licenses (unbuilt wireless spectrum licenses). UScellular performed a qualitative impairment assessment in 2020 and a quantitative impairment assessment in 2019 to determine whether an impairment existed. 

In 2020, UScellular considered several qualitative factors, including analyst estimates of wireless spectrum license values which contemplated recent spectrum auction results, recent UScellular and other market participant transactions and other industry and market factors. Based on this assessment, UScellular concluded that it was more likely than not that the fair value of the wireless spectrum licenses in each unit of accounting exceeded their respective carrying values. Therefore, no quantitative impairment evaluation was completed.

In 2019, a market approach was used to value the wireless spectrum license portfolio. Within each unit of accounting, the wireless spectrum licenses were pooled by type and by geographic area. The market approach calculates estimated market values using observable pricing multiples from wireless spectrum license purchase and auction transactions to estimate fair value for each pool of wireless spectrum licenses. The sum of the fair values of each of the pools represents the estimated fair value of UScellular's wireless spectrum licenses. The most significant assumption made in this process was the pricing multiples which are units of value expressed in relation to the bandwidth and population covered by a wireless spectrum license. Based on the assessment, the fair values of the wireless spectrum license units of accounting exceeded their respective carrying values by amounts ranging from 39% to greater than 100%. It was determined that the carrying value of wireless spectrum licenses acquired through Auction 101 and 102 approximated fair value based on the recency of the auctions. Therefore, no impairment of wireless spectrum licenses existed.

Goodwill – TDS Telecom

TDS Telecom has recorded Goodwill as a result of past acquisitions of wireline and cable businesses. For purposes of the 2020 and 2019 Goodwill impairment tests, TDS Telecom had two reporting units: Wireline and Cable. 

Based on the results of TDS Telecom's annual Goodwill impairment assessment performed as of November 1, 2020, the fair values of the Wireline and Cable reporting units exceeded their carrying values. Therefore, no impairment of Goodwill was recorded for these reporting units. 

The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units. The discounted cash flow approach develops an indication of fair value using various inputs and considers current economic factors as well as risks specific to the industry and the reporting unit. The most significant assumptions made in this process were the revenue growth rate (shown as a compound annual growth rate in the table below), the terminal growth rate and the discount rate. The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the respective reporting unit to determine an estimated fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value used for impairment testing. The weighting of methods was consistently applied in both 2020 and 2019.

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For purposes of the discounted cash flow approach, the following table represents key assumptions used in estimating the fair value of the Wireline and Cable reporting units as of November 1, 2020. Except for the revenue growth rate at the Wireline reporting unit, the other key assumptions used in the 2020 annual impairment assessment did not change significantly from the key assumptions used in the 2019 annual impairment assessment. The Wireline reporting unit's revenue growth rate increased year over year due primarily to the growth and inclusion of TDS Telecom's fiber deployments in new out-of-territory markets in the discounted cash flow model. There are uncertainties associated with these key assumptions and potential events and/or circumstances that could have a negative effect on the key assumptions described below.

Key Assumptions	Wireline		Cable
Revenue growth rate1	6.2	%	5.5	%
Terminal growth rate1	0.0	%	2.0	%
Discount rate2	6.5	%	7.5	%

1    There are risks that could negatively impact the projected revenue and terminal growth rates, including but not limited to macroeconomic and industry factors. 

2    The discount rate is derived based on a set of guideline public companies and is an indicator of the cost of capital for a market participant in TDS Telecom's industries. The discount rate may increase if borrowing costs rise, market participants weight more of their capital structure towards equity vs. debt, long-term risk free interest rates increase, Wireline's or Cable's risk in relation to its peers increases, or other elements affecting the estimated cost of equity or debt increase.

Provided all other assumptions remained the same, the Wireline and Cable discount rates would have to increase to approximately 10% and 17%, respectively, to yield estimated fair values equal to their respective carrying values at November 1, 2020. Further, provided all other assumptions remained the same, the Wireline and Cable terminal growth rate assumptions would need to decrease to approximately negative 4% and negative 15%, respectively, to yield an estimate of fair value equal to the carrying value of the respective reporting units at November 1, 2020.

The Goodwill balances of the reporting units tested for impairment as of November 1, 2020, and the percentage by which the estimated fair value of the corresponding reporting units exceeded their carrying values, as a percentage of carrying value, was as follows:

Reporting unit	Goodwill balance		Excess of estimated Fair Value over Carrying Value
(Dollars in millions)
Wireline	$	409	47	%
Cable	$	138	85	%

Income Taxes

The amounts of income tax assets and liabilities, the related income tax provision and the amount of unrecognized tax benefits are critical accounting estimates because such amounts are significant to TDS’ financial condition and results of operations.

The preparation of the consolidated financial statements requires TDS to calculate a provision for income taxes. This process involves estimating the actual current income tax liability together with assessing temporary differences resulting from the different treatment of items for tax purposes. These temporary differences result in deferred income tax assets and liabilities which are included on a net basis in TDS’ Consolidated Balance Sheet. TDS must then assess the likelihood that deferred income tax assets will be realized based on future taxable income and, to the extent management believes that realization is not likely, establish a valuation allowance. Management’s judgment is required in determining the provision for income taxes, deferred income tax assets and liabilities and any valuation allowance that is established for deferred income tax assets.

TDS recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on management’s judgment as to the possible outcome that has a greater than 50% cumulative likelihood of being realized upon ultimate resolution.

See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information.

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Regulatory Matters

5G Fund

On October 27, 2020, the FCC adopted rules creating the 5G Fund for Rural America, which will distribute up to $9 billion over ten years to bring 5G wireless broadband connectivity to rural America. The 5G Fund will be implemented through a two-phase competitive process, using multi-round auctions to award support. The winning bidders will be required to meet certain minimum speed requirements and interim and final deployment milestones. The order provides that the 5G Fund be in lieu of the previously proposed fund (the Phase II Connect America Mobility Fund) for the development of 4G LTE. The order also provides that over time a growing percentage of the legacy support a carrier receives must be used for 5G deployment.

UScellular cannot predict at this time when the 5G fund auction will occur, when the phase down period for its existing legacy support from the Federal USF will commence, or whether the 5G fund auction will provide opportunities to UScellular to offset any loss in existing support.

FCC Rulemaking – Restoring Internet Freedom

In December 2017, the FCC approved rules reversing or revising decisions made in the FCC’s 2015 Open Internet and Title II Order (Restoring Internet Freedom). The 2017 action reversed the FCC’s 2015 decision to reclassify Broadband Internet Access Services as telecommunications services subject to regulation under Title II of the Telecommunications Act. The 2017 action also reversed the FCC’s 2015 restrictions on blocking, throttling and paid prioritization, and modified transparency rules relating to such practices. Several parties filed suit in federal court challenging the 2017 actions. On October 1, 2019, the Court of Appeals for the D.C. Circuit issued an order reaffirming the FCC in most respects, but limiting the FCC's ability to preempt state and local net neutrality laws. On February 19, 2020, the FCC issued a Public Notice seeking comment on three issues under further consideration by the FCC based on a recent D.C. Circuit decision. On October 27, 2020, the FCC adopted an Order on Remand in response to the U.S. Court of Appeals for the D.C. Circuit’s remand on the three issues under further consideration by the FCC and found no basis to alter the FCC’s conclusions in the Restoring Internet Freedom Order.

A number of states, including certain states in which TDS operates, have adopted or considered laws intended to reinstate aspects of the foregoing net neutrality regulations that were reversed or revised by the FCC in 2017. To the extent such laws are enacted, it is expected that legal proceedings will be pursued challenging such laws, subject now to the DC Circuit ruling limiting the FCC's preemptive authority in this matter. The new administration may also conduct rulemaking proceedings that may reinstate in some form net neutrality rules. TDS cannot predict the outcome of any of these proceedings or the impact on its business.

Spectrum Auctions

On July 11, 2019, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 37, 39 and 47 GHz bands (Auction 103). On March 12, 2020, the FCC announced by public notice that UScellular was the provisional winning bidder for 237 wireless spectrum licenses for a purchase price of $146 million. In June 2020, the wireless spectrum licenses from Auction 103 were granted by the FCC.

On March 2, 2020, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.5 GHz band (Auction 105). On September 2, 2020, the FCC announced by public notice that UScellular was the provisional winning bidder for 243 wireless spectrum licenses for a purchase price of $14 million. The wireless spectrum licenses are expected to be granted by the FCC in 2021.

On August 7, 2020, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.7-3.98 GHz bands (Auction 107). UScellular filed an application to participate in Auction 107 on September 21, 2020. Bidding in Auction 107 commenced on December 8, 2020. The initial phase of this auction closed on January 15, 2021 and the assignment phase commenced on February 8, 2021.

Rural Digital Opportunity Fund

On January 30, 2020, the FCC adopted the Rural Digital Opportunity Fund Report and Order, which establishes the framework for the Rural Digital Opportunity Fund (Auction 904). Auction 904 was a reverse auction to provide funding for high speed fixed broadband service in underserved rural areas. On July 15, 2020, UScellular filed an application to participate in Auction 904. Auction 904 began on October 29, 2020 and concluded on November 25, 2020. UScellular was not a winning bidder in Auction 904.

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Private Securities Litigation Reform Act of 1995

Safe Harbor Cautionary Statement

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities, events or developments that TDS intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward‑looking statements, but are not the exclusive means of identifying them. Such forward‑looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward‑looking statements. Such risks, uncertainties and other factors include, but are not limited to, those set forth below. See “Risk Factors” in TDS’ Annual Report on Form 10-K for the year ended December 31, 2020, for a further discussion of these risks. Each of the following risks could have a material adverse effect on TDS’ business, financial condition or results of operations. However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document. Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements. TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Readers should evaluate any statements in light of these important factors.

Operational Risk Factors

▪Intense competition involving products, services, pricing, and network speed and technologies could adversely affect TDS’ revenues or increase its costs to compete.

▪Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.

▪A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.

▪An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.

▪TDS’ smaller scale relative to larger competitors that may have greater financial and other resources than TDS could cause TDS to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations.

▪Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations.

▪Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.

▪Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects.

▪Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.

▪A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations.

▪Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties of key suppliers or independent agents and third party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations.

▪A failure by TDS to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.

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Financial Risk Factors

▪Uncertainty in TDS’ future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, other changes in TDS’ performance or market conditions, changes in TDS’ credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, and/or reduce or cease share repurchases and/or the payment of dividends.

▪TDS has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.

▪TDS’ assets and revenue are concentrated primarily in the U.S. telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry.

▪TDS has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on TDS’ financial condition or results of operations.

Regulatory, Legal and Governance Risk Factors

▪Failure by TDS to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect TDS’ business, financial condition or results of operations.

▪TDS receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on TDS’ business, financial condition or results of operations.

▪Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ business, financial condition or results of operations.

▪The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on TDS’ wireless business, financial condition or results of operations.

▪Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.

▪Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS or have other consequences.

General Risk Factors

▪TDS has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on TDS' business, financial condition or results of operations.

▪Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations.

▪The impact of public health emergencies, such as the COVID-19 pandemic, on TDS' business is uncertain, but depending on duration and severity could have a material adverse effect on TDS' business, financial condition or results of operations.

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Market Risk

Long-Term Debt

As of December 31, 2020, the majority of TDS’ long-term debt was in the form of fixed-rate notes with remaining maturities ranging up to 50 years. Fluctuations in market interest rates can lead to significant fluctuations in the fair value of these fixed-rate notes.

The following chart presents the scheduled principal payments on long-term debt by maturity dates at December 31, 2020:

The following table presents the scheduled principal payments on long-term debt, finance lease obligations, and other installment arrangements, and the related weighted average interest rates by maturity dates at December 31, 2020:

	Principal Payments Due by Period
	Long-Term Debt Obligations1		Weighted-Avg. Interest Rates on Long-Term Debt Obligations2
(Dollars in millions)
2021	$	5	2.8	%
2022	30		1.6	%
2023	5		2.5	%
2024	5		2.5	%
2025	5		2.5	%
Thereafter	3,488		6.3	%
Total	$	3,538	6.3	%

1    The total long-term debt obligation differs from Long-term debt in the Consolidated Balance Sheet due to unamortized debt issuance costs on all non-revolving debt instruments and unamortized discounts related to UScellular's 6.7% Senior Notes. See Note 12 — Debt in the Notes to Consolidated Financial Statements for additional information.

2    Represents the weighted average stated interest rates at December 31, 2020, for debt maturing in the respective periods.

Fair Value of Long-Term Debt

At December 31, 2020 and 2019, the estimated fair value of long-term debt obligations, excluding finance lease obligations, other installment arrangements, the current portion of such long-term debt and debt financing costs, was $3,746 million and $2,474 million, respectively. See Note 3 — Fair Value Measurements in the Notes to Consolidated Financial Statements for additional information.

Other Market Risk Sensitive Instruments

The substantial majority of TDS’ other market risk sensitive instruments (as defined in Item 305 of SEC Regulation S-K) are short-term, including Cash and cash equivalents. Accordingly, TDS believes that a significant change in interest rates would not have a material effect on such other market risk sensitive instruments.

36

Supplemental Information Relating to Non-GAAP Financial Measures

TDS sometimes uses information derived from consolidated financial information but not presented in its financial statements prepared in accordance with GAAP to evaluate the performance of its business. Certain of these measures are considered “non-GAAP financial measures” under U.S. Securities and Exchange Commission Rules. Specifically, TDS has referred to the following measures in this Form 10-K Report:

▪EBITDA

▪Adjusted EBITDA

▪Adjusted OIBDA

▪Free cash flow

Following are explanations of each of these measures:

EBITDA, Adjusted EBITDA and Adjusted OIBDA

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation below. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under GAAP and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation below are non-recurring, infrequent or unusual; such items may occur in the future.

Adjusted EBITDA is a segment measure reported to the chief operating decision maker for purposes of assessing their performance. See Note 19 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information.

Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore, reconciliations to applicable GAAP income measures are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented below as they provide additional relevant and useful information to investors and other users of TDS’ financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes and Operating income. Income tax expense is not provided at the individual segment level for Wireline and Cable. TDS calculates income tax expense (benefit) for TDS Telecom in total.

TDS - CONSOLIDATED	2020		2019
(Dollars in millions)
Net income (GAAP)	$	269	$	147
Add back or deduct:
Income tax expense	19		64
Interest expense	168		165
Depreciation, amortization and accretion	909		932
EBITDA (Non-GAAP)	1,365		1,308
Add back or deduct:
(Gain) loss on asset disposals, net	27		12
(Gain) loss on sale of business and other exit costs, net	—		(1)
(Gain) loss on license sales and exchanges, net	(5)		—
(Gain) loss on investments	(2)		—
Adjusted EBITDA (Non-GAAP)	1,385		1,319
Deduct:
Equity in earnings of unconsolidated entities	181		168
Interest and dividend income	15		29
Other, net	(1)		—
Adjusted OIBDA (Non-GAAP)	1,190		1,122
Deduct:
Depreciation, amortization and accretion	909		932
(Gain) loss on asset disposals, net	27		12
(Gain) loss on sale of business and other exit costs, net	—		(1)
(Gain) loss on license sales and exchanges, net	(5)		—
Operating income (GAAP)	$	259	$	179

37

UScellular	2020		2019
(Dollars in millions)
Net income (GAAP)	$	233	$	133
Add back or deduct:
Income tax expense	17		52
Interest expense	112		110
Depreciation, amortization and accretion	683		702
EBITDA (Non-GAAP)	1,045		997
Add back or deduct:
(Gain) loss on asset disposals, net	25		19
(Gain) loss on sale of business and other exit costs, net	—		(1)
(Gain) loss on license sales and exchanges, net	(5)		—
(Gain) loss on investments	(2)		—
Adjusted EBITDA (Non-GAAP)	1,063		1,015
Deduct:
Equity in earnings of unconsolidated entities	179		166
Interest and dividend income	8		17
Adjusted OIBDA (Non-GAAP)	876		832
Deduct:
Depreciation, amortization and accretion	683		702
(Gain) loss on asset disposals, net	25		19
(Gain) loss on sale of business and other exit costs, net	—		(1)
(Gain) loss on license sales and exchanges, net	(5)		—
Operating income (GAAP)	$	173	$	112

TDS TELECOM	2020		2019
(Dollars in millions)
Net income (GAAP)	$	100	$	92
Add back or deduct:
Income tax expense	18		30
Interest expense	(4)		(3)
Depreciation, amortization and accretion	203		200
EBITDA (Non-GAAP)	316		320
Add back or deduct:
(Gain) loss on asset disposals, net	1		(7)
Adjusted EBITDA (Non-GAAP)	317		313
Deduct:
Interest and dividend income	5		12
Other, net	(1)		—
Adjusted OIBDA (Non-GAAP)	314		300
Deduct:
Depreciation, amortization and accretion	203		200
(Gain) loss on asset disposals, net	1		(7)
Operating income (GAAP)	$	110	$	107

Numbers may not foot due to rounding.

38

WIRELINE	2020		2019
(Dollars in millions)
Income before income taxes (GAAP)	$	99	$	110
Add back or deduct:
Interest expense	(4)		(3)
Depreciation, amortization and accretion	124		132
EBITDA (Non-GAAP)	219		239
Add back or deduct:
(Gain) loss on asset disposals, net	—		(8)
Adjusted EBITDA (Non-GAAP)	220		231
Deduct:
Interest and dividend income	4		10
Other, net	(1)		—
Adjusted OIBDA (Non-GAAP)	217		220
Deduct:
Depreciation, amortization and accretion	124		132
(Gain) loss on asset disposals, net	—		(8)
Operating income (GAAP)	$	92	$	96

Numbers may not foot due to rounding. 

CABLE	2020		2019
(Dollars in millions)
Income before income taxes (GAAP)	$	18	$	13
Add back:
Depreciation, amortization and accretion	78		68
EBITDA (Non-GAAP)	97		81
Add back or deduct:
(Gain) loss on asset disposals, net	1		1
Adjusted EBITDA (Non-GAAP)	97		82
Deduct:
Interest and dividend income	1		2
Adjusted OIBDA (Non-GAAP)	97		80
Deduct:
Depreciation, amortization and accretion	78		68
(Gain) loss on asset disposals, net	1		1
Operating income (GAAP)	$	18	$	11

Numbers may not foot due to rounding.

Free Cash Flow

The following table presents Free cash flow, which is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment. Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.

	2020		2019
(Dollars in millions)
Cash flows from operating activities (GAAP)	$	1,532	$	1,016
Less: Cash paid for additions to property, plant and equipment	1,338		957
Free cash flow (Non-GAAP)	$	194	$	59

39

Financial Statements

Telephone and Data Systems, Inc.

Consolidated Statement of Operations

 

Year Ended December 31,	2020		2019		2018
(Dollars and shares in millions, except per share amounts)
Operating revenues
Service	$	4,136	$	4,059	$	3,999
Equipment and product sales	1,089		1,117		1,110
Total operating revenues	5,225		5,176		5,109
Operating expenses
Cost of services (excluding Depreciation, amortization and accretion reported below)	1,244		1,202		1,206
Cost of equipment and products	1,110		1,135		1,130
Selling, general and administrative	1,681		1,717		1,694
Depreciation, amortization and accretion	909		932		883
(Gain) loss on asset disposals, net	27		12		9
(Gain) loss on sale of business and other exit costs, net	—		(1)		—
(Gain) loss on license sales and exchanges, net	(5)		—		(18)
Total operating expenses	4,966		4,997		4,904
Operating income	259		179		205
Investment and other income (expense)
Equity in earnings of unconsolidated entities	181		168		160
Interest and dividend income	15		29		26
Gain (loss) on investments	2		—		—
Interest expense	(168)		(165)		(172)
Other, net	(1)		—		2
Total investment and other income	29		32		16
Income before income taxes	288		211		221
Income tax expense	19		64		46
Net income	269		147		175
Less: Net income attributable to noncontrolling interests, net of tax	43		26		40
Net income attributable to TDS shareholders	$	226	$	121	$	135
Basic weighted average shares outstanding	114		114		112
Basic earnings per share attributable to TDS shareholders	$	1.97	$	1.06	$	1.20
Diluted weighted average shares outstanding	115		116		114
Diluted earnings per share attributable to TDS shareholders	$	1.93	$	1.03	$	1.17

The accompanying notes are an integral part of these consolidated financial statements.

40

Telephone and Data Systems, Inc.

Consolidated Statement of Comprehensive Income

 

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Net income	$	269	$	147	$	175
Net change in accumulated other comprehensive income
Change related to retirement plan
Amounts included in net periodic benefit cost for the period
Net actuarial gains	3		1		—
Prior service cost	—		—		(10)
Amortization of prior service cost	3		1		(1)
	6		2		(11)
Change in deferred income taxes	(1)		(1)		3
Change related to retirement plan, net of tax	5		1		(8)
Net change in accumulated other comprehensive income	5		1		(8)
Comprehensive income	274		148		167
Less: Net income attributable to noncontrolling interests, net of tax	43		26		40
Comprehensive income attributable to TDS shareholders	$	231	$	122	$	127

The accompanying notes are an integral part of these consolidated financial statements.

41

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Cash flows from operating activities
Net income	$	269	$	147	$	175
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion	909		932		883
Bad debts expense	77		112		101
Stock-based compensation expense	53		59		54
Deferred income taxes, net	190		34		33
Equity in earnings of unconsolidated entities	(181)		(168)		(160)
Distributions from unconsolidated entities	189		162		153
(Gain) loss on asset disposals, net	27		12		9
(Gain) loss on sale of business and other exit costs, net	—		(1)		—
(Gain) loss on license sales and exchanges, net	(5)		—		(18)
(Gain) loss on investments	(2)		—		—
Other operating activities	3		4		4
Changes in assets and liabilities from operations
Accounts receivable	(16)		(49)		(39)
Equipment installment plans receivable	(54)		(97)		(149)
Inventory	12		(19)		(5)
Accounts payable	173		(60)		2
Customer deposits and deferred revenues	4		(9)		8
Accrued taxes	(120)		(17)		(29)
Other assets and liabilities	4		(26)		(5)
Net cash provided by operating activities	1,532		1,016		1,017
Cash flows from investing activities
Cash paid for additions to property, plant and equipment	(1,338)		(957)		(776)
Cash paid for acquisitions and licenses	(172)		(346)		(16)
Cash received from investments	1		29		100
Cash paid for investments	(3)		(11)		(17)
Cash received from divestitures and exchanges	26		41		29
Advance payments for license acquisitions	(30)		(5)		(2)
Other investing activities	5		—		2
Net cash used in investing activities	(1,511)		(1,249)		(680)
Cash flows from financing activities
Issuance of long-term debt	1,250		—		—
Repayment of long-term debt	(110)		(118)		(20)
TDS Common Shares reissued for benefit plans, net of tax payments	(3)		(6)		42
UScellular Common Shares reissued for benefit plans, net of tax payments	(11)		(9)		18
Repurchase of TDS Common Shares	(14)		—		—
Repurchase of UScellular Common Shares	(23)		(21)		—
Dividends paid to TDS shareholders	(78)		(75)		(72)
Payment of debt issuance costs	(41)		(1)		(2)
Distributions to noncontrolling interests	(2)		(4)		(6)
Payments to acquire additional interest in subsidiaries	(11)		—		—
Other financing activities	—		14		8
Net cash provided by (used in) financing activities	957		(220)		(32)
Net increase (decrease) in cash, cash equivalents and restricted cash	978		(453)		305
Cash, cash equivalents and restricted cash
Beginning of period	474		927		622
End of period	$	1,452	$	474	$	927

The accompanying notes are an integral part of these consolidated financial statements.

42

Telephone and Data Systems, Inc.

Consolidated Balance Sheet — Assets

December 31,	2020		2019
(Dollars in millions)
Current assets
Cash and cash equivalents	$	1,429	$	465
Short-term investments	3		—
Accounts receivable
Customers and agents, less allowances of $67 and $74, respectively	1,004		1,005
Other, less allowances of $2 and $2, respectively	108		119
Inventory, net	154		169
Prepaid expenses	105		98
Income taxes receivable	187		36
Other current assets	36		29
Total current assets	3,026		1,921
Assets held for sale	2		—
Licenses	2,638		2,480
Goodwill	547		547
Other intangible assets, net of accumulated amortization of $71 and $65, respectively1	213		239
Investments in unconsolidated entities	477		488
Property, plant and equipment
In service and under construction	13,659		12,864
Less: Accumulated depreciation and amortization	9,687		9,337
Property, plant and equipment, net	3,972		3,527
Operating lease right-of-use assets	998		972
Other assets and deferred charges	652		607
Total assets2	$	12,525	$	10,781

The accompanying notes are an integral part of these consolidated financial statements.

43

Telephone and Data Systems, Inc.

Consolidated Balance Sheet — Liabilities and Equity

December 31,	2020		2019
(Dollars and shares in millions, except per share amounts)
Current liabilities
Current portion of long-term debt	$	5	$	10
Accounts payable	508		374
Customer deposits and deferred revenues	193		189
Accrued interest	16		11
Accrued taxes	69		41
Accrued compensation	132		121
Short-term operating lease liabilities	129		116
Other current liabilities	101		100
Total current liabilities	1,153		962
Liabilities held for sale	1		—
Deferred liabilities and credits
Deferred income tax liability, net	863		676
Long-term operating lease liabilities	940		931
Other deferred liabilities and credits	541		481
Long-term debt, net	3,424		2,316
Commitments and contingencies
Noncontrolling interests with redemption features	10		11
Equity
TDS shareholders’ equity
Series A Common and Common Shares
Authorized 290 shares (25 Series A Common and 265 Common Shares)
Issued 133 shares (7 Series A Common and 126 Common Shares)
Outstanding 114 shares (7 Series A Common and 107 Common Shares) and 115 shares (7 Series A Common and 108 Common Shares), respectively
Par Value ($0.01 per share)	1		1
Capital in excess of par value	2,482		2,468
Treasury shares, at cost, 19 and 18 Common Shares, respectively	(477)		(479)
Accumulated other comprehensive loss	(4)		(9)
Retained earnings	2,802		2,672
Total TDS shareholders’ equity	4,804		4,653
Noncontrolling interests	789		751
Total equity	5,593		5,404
Total liabilities and equity2	$	12,525	$	10,781

The accompanying notes are an integral part of these consolidated financial statements.

1The accumulated amortization balance at December 31, 2019 differs from the amount reported in the Consolidated Balance Sheet of the 2019 Form 10-K, as the previously reported amount included certain intangible assets that were fully amortized and had a net book value of zero.

2The consolidated total assets as of December 31, 2020 and 2019, include assets held by consolidated variable interest entities (VIEs) of $1,042 million and $915 million, respectively, which are not available to be used to settle the obligations of TDS. The consolidated total liabilities as of December 31, 2020 and 2019, include certain liabilities of consolidated VIEs of $18 million and $20 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of TDS. See Note 15 — Variable Interest Entities for additional information.

44

Telephone and Data Systems, Inc.

Consolidated Statement of Changes in Equity

	TDS Shareholders
	Series A Common and Common shares		Capital in excess of par value		Treasury shares		Accumulated other comprehensive income (loss)		Retained earnings		Total TDS shareholders' equity		Noncontrolling interests		Total equity
(Dollars in millions, except per share amounts)
December 31, 2019	$	1	$	2,468	$	(479)	$	(9)	$	2,672	$	4,653	$	751	$	5,404
Cumulative effect of accounting changes	—		—		—		—		(2)		(2)		—		(2)
Net income attributable to TDS shareholders	—		—		—		—		226		226		—		226
Net income attributable to noncontrolling interests classified as equity	—		—		—		—		—		—		43		43
Other comprehensive income	—		—		—		5		—		5		—		5
TDS Common and Series A Common share dividends ($0.68 per share)	—		—		—		—		(78)		(78)		—		(78)
Repurchase of Common Shares	—		—		(14)		—		—		(14)		—		(14)
Dividend reinvestment plan	—		—		3		—		—		3		—		3
Incentive and compensation plans	—		21		13		—		(16)		18		—		18
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	—		(7)		—		—		—		(7)		(3)		(10)
Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)
December 31, 2020	$	1	$	2,482	$	(477)	$	(4)	$	2,802	$	4,804	$	789	$	5,593

The accompanying notes are an integral part of these consolidated financial statements. 

45

Telephone and Data Systems, Inc.

Consolidated Statement of Changes in Equity

 

	TDS Shareholders
	Series A Common and Common shares		Capital in excess of par value		Treasury shares		Accumulated other comprehensive income (loss)		Retained earnings		Total TDS shareholders' equity		Noncontrolling interests		Total equity
(Dollars in millions, except per share amounts)
December 31, 2018	$	1	$	2,432	$	(519)	$	(10)	$	2,656	$	4,560	$	733	$	5,293
Cumulative effect of accounting changes	—		—		—		—		2		2		—		2
Net income attributable to TDS shareholders	—		—		—		—		121		121		—		121
Net income attributable to noncontrolling interests classified as equity	—		—		—		—		—		—		26		26
Other comprehensive income	—		—		—		1		—		1		—		1
TDS Common and Series A Common Share dividends ($0.66 per share)	—		—		—		—		(75)		(75)		—		(75)
Dividend reinvestment plan	—		1		20		—		(6)		15		—		15
Incentive and compensation plans	—		18		20		—		(26)		12		—		12
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	—		17		—		—		—		17		(5)		12
Distributions to noncontrolling interests	—		—		—		—		—		—		(3)		(3)
December 31, 2019	$	1	$	2,468	$	(479)	$	(9)	$	2,672	$	4,653	$	751	$	5,404

The accompanying notes are an integral part of these consolidated financial statements. 

46

Telephone and Data Systems, Inc.

Consolidated Statement of Changes in Equity

 

	TDS Shareholders
	Series A Common and Common shares		Capital in excess of par value		Treasury shares		Accumulated other comprehensive income (loss)		Retained earnings		Total TDS shareholders' equity		Noncontrolling interests		Total equity
(Dollars in millions, except per share amounts)
December 31, 2017	$	1	$	2,413	$	(669)	$	(1)	$	2,525	$	4,269	$	623	$	4,892
Cumulative effect of accounting changes	—		—		—		(1)		165		164		31		195
Net income attributable to TDS shareholders	—		—		—		—		135		135		—		135
Net income attributable to noncontrolling interests classified as equity	—		—		—		—		—		—		28		28
Other comprehensive loss	—		—		—		(8)		—		(8)		—		(8)
TDS Common and Series A Common Share dividends ($0.64 per share)	—		—		—		—		(72)		(72)		—		(72)
Dividend reinvestment plan	—		1		25		—		(14)		12		—		12
Incentive and compensation plans	—		17		125		—		(83)		59		—		59
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	—		1		—		—		—		1		54		55
Distributions to noncontrolling interests	—		—		—		—		—		—		(3)		(3)
December 31, 2018	$	1	$	2,432	$	(519)	$	(10)	$	2,656	$	4,560	$	733	$	5,293

The accompanying notes are an integral part of these consolidated financial statements.

47

Telephone and Data Systems, Inc.

Notes to Consolidated Financial Statements

Note 1 Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Nature of Operations

Telephone and Data Systems, Inc. (TDS) is a diversified telecommunications company providing high-quality communications services to customers with 5.0 million wireless connections and 1.2 million wireline and cable connections at December 31, 2020. TDS conducts all of its wireless operations through its 82%-owned subsidiary, United States Cellular Corporation (UScellular). TDS provides wireline and cable services through its wholly-owned subsidiary, TDS Telecommunications LLC (TDS Telecom). 

TDS has the following reportable segments: UScellular, Wireline, and Cable. TDS’ non-reportable other business activities are presented as “Corporate, Eliminations and Other”, which includes the operations of TDS' wholly-owned hosted and managed services (HMS) subsidiary, which operates under the OneNeck IT Solutions brand, and its wholly-owned printing subsidiary Suttle-Straus, Inc. (Suttle-Straus). HMS' and Suttle-Straus' financial results were not significant to TDS' operations. All of TDS’ segments operate only in the United States. See Note 19 — Business Segment Information for summary financial information on each business segment.

Principles of Consolidation

The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of TDS and subsidiaries in which it has a controlling financial interest, including UScellular and TDS Telecom. In addition, the consolidated financial statements include certain entities in which TDS has a variable interest that requires consolidation under GAAP. See Note 15 — Variable Interest Entities for additional information relating to TDS’ VIEs. Intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill, indefinite-lived intangible assets and income taxes.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Cash and cash equivalents subject to contractual restrictions are classified as restricted cash. The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows.

December 31,	2020		2019
(Dollars in millions)
Cash and cash equivalents	$	1,429	$	465
Restricted cash included in Other current assets	23		9
Cash, cash equivalents and restricted cash in the statement of cash flows	$	1,452	$	474

Accounts Receivable and Allowance for Doubtful Accounts

UScellular’s accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices and accessories under installment plans, by agents and third-party distributors for sales of equipment to them and by other wireless carriers whose customers have used UScellular’s wireless systems.

TDS Telecom’s accounts receivable primarily consist of amounts owed by customers for services and products provided, by state and federal governments for grants and support funds, and by interexchange carriers for long-distance and data traffic, which TDS Telecom carries on its network.

TDS estimates expected credit losses related to accounts receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. Expected credit losses are determined for each pool of accounts receivable balances that share similar risk characteristics. The allowance for doubtful accounts is the best estimate of the amount of expected credit losses related to existing accounts receivable. TDS does not have any off-balance sheet credit exposure related to its customers.

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Inventory

Inventory consists primarily of wireless devices stated at the lower of cost, which approximates cost determined on the first-in first-out basis, or net realizable value. Net realizable value is determined by reference to the stand-alone selling price.

Licenses

Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (FCC) wireless spectrum licenses that generally provide UScellular with the exclusive right to utilize designated radio spectrum within specific geographic service areas to provide wireless service. Although wireless spectrum licenses are issued for a fixed period of time, generally ten years, or in some cases twelve or fifteen years, the FCC has granted license renewals routinely and at a nominal cost. The wireless spectrum licenses held by UScellular expire at various dates. UScellular believes that it is probable that its future wireless spectrum license renewal applications will be granted. UScellular determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of the wireless spectrum licenses. Therefore, UScellular has determined that wireless spectrum licenses are indefinite-lived intangible assets.

UScellular performs its annual impairment assessment of wireless spectrum licenses as of November 1 of each year or more frequently if there are events or circumstances that cause UScellular to believe it is more likely than not that the carrying value of wireless spectrum licenses exceeds fair value. For purposes of its impairment testing, UScellular separated its FCC wireless spectrum licenses into eight units of accounting. The eight units of accounting consisted of one unit of accounting for developed operating market wireless spectrum licenses (built wireless spectrum licenses) and seven units of accounting for geographic non-operating market wireless spectrum licenses (unbuilt wireless spectrum licenses). 

UScellular performed a qualitative impairment assessment in 2020 and a quantitative impairment assessment in 2019 to determine whether the wireless spectrum licenses were impaired. Based on the impairment assessments performed, UScellular did not have an impairment of its wireless spectrum licenses in 2020 or 2019. See Note 7 — Intangible Assets for additional details related to wireless spectrum licenses.

Goodwill

TDS has Goodwill as a result of its acquisition of wireline and cable companies. TDS performs its annual impairment assessment of Goodwill as of November 1 of each year or more frequently if there are events or circumstances that cause TDS to believe it is more likely than not that the carrying value of individual reporting units exceeds their respective fair values. Goodwill impairment loss will be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

For purposes of conducting its Goodwill impairment tests, TDS Telecom identified two reporting units: Wireline and Cable. The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units for the annual impairment tests. Based on the annual impairment assessments performed, Wireline and Cable did not have an impairment of their Goodwill in 2020 or 2019. 

See Note 7 — Intangible Assets for additional details related to Goodwill.

Franchise Rights

TDS Telecom has franchise rights as a result of acquisitions of cable businesses. Franchise rights are intangible assets that provide their holder with the right to operate a business in a certain geographical location as sanctioned by the franchiser, usually a government agency. Franchise rights are generally granted for ten years and may be renewed for additional terms upon approval by the granting authority. TDS anticipates that future renewals of its franchise rights will be granted. TDS reviews franchise rights for impairment whenever events or changes in circumstances indicate that the assets might be impaired. TDS re-evaluates the useful life of franchise rights each year to determine if changes in technology or other business changes would warrant a revision of its remaining useful life. Franchise rights are included in Other intangible assets in the Consolidated Balance Sheet.

See Note 7 — Intangible Assets for additional details related to franchise rights.

Investments in Unconsolidated Entities

For its equity method investments for which financial information is readily available, TDS records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, TDS records its equity in the earnings of the entity on a one quarter lag basis.

Property, Plant and Equipment

Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets.

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Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to Cost of services or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and recording it, together with proceeds, if any, and net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), as a gain or loss, as appropriate. Certain Wireline segment assets use the group depreciation method. Accordingly, when a group method asset is retired in the ordinary course of business, the original cost of the asset and accumulated depreciation in the same amount are removed, with no gain or loss recognized on the disposition.

TDS capitalizes certain costs of developing new information systems. Software licenses that qualify for capitalization as an asset are accounted for as the acquisition of an intangible asset and the incurrence of a liability to the extent that the license fees are not fully paid at acquisition.  

Depreciation and Amortization

Depreciation is provided using the straight-line method over the estimated useful life of the related asset, except for certain Wireline segment assets, which use the group depreciation method. The group depreciation method develops a depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually. TDS depreciates leasehold improvement assets over periods ranging from one year to thirty years; such periods approximate the shorter of the assets’ economic lives or the specific lease terms.

Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. There were no material changes to the assigned useful lives of the various categories of property, plant and equipment in 2020, 2019 or 2018. However, in 2020 and 2019, depreciation for certain specific assets was accelerated due to changes in technology. See Note 9 — Property, Plant and Equipment for additional details related to useful lives.

Impairment of Long-Lived Assets

TDS reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. UScellular has one asset group and TDS Telecom has two asset groups for purposes of assessing property, plant and equipment for impairment based on the integrated nature of its network, assets and operations. The cash flows generated by each of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Leases

A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. See Note 10 — Leases for additional details related to leases.

Agent Liabilities

UScellular has relationships with agents, which are independent businesses that obtain customers for UScellular. At December 31, 2020 and 2019, UScellular had accrued $55 million and $59 million, respectively, in agent related liabilities. These amounts are included in Other current liabilities in the Consolidated Balance Sheet.

Debt Issuance Costs

Debt issuance costs include underwriters’ and legal fees and other charges related to issuing and renewing various borrowing instruments and other long–term agreements, and are amortized over the respective term of each instrument. Debt issuance costs related to TDS’ and UScellular's revolving credit agreements and UScellular's receivables securitization agreement are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. All other debt issuance costs are presented as an offset to the related debt obligation in the Consolidated Balance Sheet.

Asset Retirement Obligations

TDS records asset retirement obligations for the fair value of legal obligations associated with asset retirements and a corresponding increase in the carrying amount of the related long-lived asset in the period in which the obligations are incurred. In periods subsequent to initial measurement, TDS recognizes changes in the liability resulting from the passage of time and updates to the timing or the amount of the original estimates. The liability is accreted to its estimated settlement date value over the period to the estimated settlement date. The change in the carrying amount of the long-lived asset is depreciated over the average remaining life of the related asset. See Note 11 — Asset Retirement Obligations for additional information.

Treasury Shares

Common Shares repurchased by TDS are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, TDS determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Capital in excess of par value or Retained earnings. 

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Revenue Recognition

Revenues from sales of equipment and products are recognized when control has transferred to the customer, agent or third-party distributor. Service revenues are recognized as the related service is provided. See Note 2 — Revenue Recognition for additional information on TDS' policies related to Revenues.

Advertising Costs

TDS expenses advertising costs as incurred. Advertising costs totaled $213 million, $227 million and $230 million in 2020, 2019 and 2018, respectively.

Income Taxes

TDS files a consolidated federal income tax return. Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the enacted tax rates in effect when the temporary differences are expected to reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. TDS evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. Deferred taxes are reported as a net non-current asset or liability by jurisdiction. Any corresponding valuation allowance to reduce the amount of deferred tax assets is also recorded as non-current. See Note 5 — Income Taxes for additional information.

Stock-Based Compensation and Other Plans

TDS has established long-term incentive plans, dividend reinvestment plans, and a non-employee director compensation plan. The dividend reinvestment plan of TDS is not considered a compensatory plan and, therefore, recognition of compensation costs for grants made under this plan is not required. All other plans are considered compensatory plans; therefore, recognition of costs for grants made under these plans is required.

TDS recognizes stock compensation expense based upon the fair value of the specific awards granted using established valuation methodologies. The amount of stock compensation cost recognized on either a straight-line basis or graded attribution method is based on the portion of the award that is expected to vest over the requisite service period, which generally represents the vesting period. Stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. See Note 18 — Stock-Based Compensation for additional information.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments and subsequently amended the standard with additional Accounting Standards Updates, collectively referred to as ASC 326. This standard requires entities to use a new forward-looking, expected loss model to estimate credit losses and requires additional disclosures relating to the credit quality of trade and other receivables. TDS adopted the provisions of ASC 326 on January 1, 2020, using a modified retrospective method. Under this method, TDS applied the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 326 had no material impact on retained earnings.

In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the existing guidance for capitalizing implementation costs for an arrangement that has a software license. The service element of a hosting arrangement will continue to be expensed as incurred. Any capitalized implementation costs will be amortized over the period of the service contract. TDS adopted ASU 2018-15 on January 1, 2020, using the prospective method. The adoption of ASU 2018-15 did not have a significant impact on TDS' financial position or results of operations.

TDS' cloud-hosted arrangements that are service contracts consist primarily of software used to perform administrative functions. Implementation costs related to TDS' cloud-hosted arrangements, which are recorded in Prepaid expenses and Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020
(Dollars in millions)
Implementation costs, gross	$	69
Accumulated amortization	(13)
Implementation costs, net	$	56

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These costs are amortized over the period of the service contract, which is generally three to five years. Amortization of implementation costs was $11 million for the year ended December 31, 2020 and was included in Selling, general and administrative expenses.

Note 2 Revenue Recognition

Nature of goods and services

The following is a description of principal activities from which TDS generates its revenues.

Services and products	Nature, timing of satisfaction of performance obligations, and significant payment terms
Wireless services	Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis.
Wireless devices and accessories	UScellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. UScellular also sells wireless devices to agents and other third-party distributors for resale. UScellular frequently discounts wireless devices sold to new and current customers. UScellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to UScellular. UScellular recognizes revenue in Equipment and product sales revenues when control of the device or accessory is transferred to the customer, agent or third-party distributor, which is generally upon delivery.
Wireless roaming	UScellular receives roaming revenues when other wireless carriers’ customers use UScellular’s wireless systems. UScellular recognizes revenue in Service revenues when the roaming service is provided.
Wireless Eligible Telecommunications Carrier (ETC) Revenues	Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which UScellular is entitled to receive for such period, as determined and approved in connection with UScellular’s designation as an ETC in various states.
Wireless tower rents	UScellular receives tower rental revenues when another carrier leases tower space on a UScellular owned tower. UScellular recognizes revenue in Service revenues in the period during which the services are provided.
Wireline services	Wireline services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Wireline services are generally billed and paid in advance on a monthly basis.
Wireline wholesale revenues	Wholesale revenues include network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom’s network, special access services and state and federal support payments, including A-CAM. Wholesale revenues are recorded as the related service is provided.
Cable services	Cable services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Cable services are generally billed and paid in advance on a monthly basis.
IT hardware sales	TDS recognizes equipment revenue when it no longer has any requirements to perform, when title has passed and when the products are accepted by the customer.
Hosted and managed services	HMS Service revenues consist of cloud and hosting solutions, managed services, Enterprise Resource Planning (ERP) application management, colocation services, and IT hardware related maintenance and professional services. Revenues related to these services are recognized as services are provided.

Significant Judgments

As a practical expedient, TDS groups similar contracts or similar performance obligations together into portfolios of contracts or performance obligations if doing so does not result in a significant difference from accounting for the individual contracts discretely. TDS applies this grouping method for the following types of transactions: device activation fees, contract acquisition costs, contract fulfillment costs, and certain customer promotions. Contract portfolios are recognized over the respective expected customer lives or terms of the contracts.

Services are deemed to be highly interrelated when the method and timing of transfer and performance risk are the same. Highly interrelated services that are determined to not be distinct have been grouped into a single performance obligation. Each month of services promised is a performance obligation. The series of monthly service performance obligations promised over the course of the contract are combined into a single performance obligation for purposes of the allocation.

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TDS has made judgments regarding transaction price, including but not limited to issues relating to variable consideration, time value of money, returns and non-cash consideration. When determined to be significant in the context of the contract, these items are considered in the valuation of transaction price at contract inception or modification, as appropriate.

Multiple Performance Obligations

UScellular and TDS Telecom sell bundled service and equipment offerings. In these instances, TDS recognizes its revenue based on the relative standalone selling prices for each distinct service or equipment performance obligation, or bundles thereof. TDS estimates the standalone selling price of the device or accessory to be its retail price excluding discounts. TDS estimates the standalone selling price of wireless service to be the price offered to customers on month-to-month contracts.

Incentives

Discounts, incentives, and rebates to agents and end customers that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. 

From time to time, UScellular may offer certain promotions to incentivize customers to switch to, or to purchase additional services from, UScellular. Under these types of promotions, an eligible customer may receive an incentive in the form of a discount off additional services purchased shown as a credit to the customer’s monthly bill. UScellular accounts for the future discounts as material rights at the time of the initial transaction by allocating and deferring revenue based on the relative proportion of the future discounts in comparison to the aggregate initial purchase. The deferred revenue will be recognized as service revenue in future periods. 

Amounts Collected from Customers and Remitted to Governmental Authorities

TDS records amounts collected from customers and remitted to governmental authorities on a net basis within a liability account if the amount is assessed upon the customer and TDS merely acts as an agent in collecting the amount on behalf of the imposing governmental authority. If the amount is assessed upon TDS, then amounts collected from customers are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $82 million, $78 million and $90 million for 2020, 2019 and 2018, respectively.

Disaggregation of Revenue

In the following table, TDS' revenues are disaggregated by type of service, which represents the relevant categorization of revenues for TDS' reportable segments, and timing of recognition. Service revenues are recognized over time and Equipment and product sales are point in time.

			TDS Telecom
Year Ended December 31, 2020	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,686	$	—	$	—	$	—	$	—	$	2,686
Inbound roaming	152		—		—		—		—		152
Residential	—		349		245		594		—		594
Commercial	—		152		46		198		—		198
Wholesale	—		181		—		181		—		181
Other service	152		—		—		(1)		69		220
Service revenues from contracts with customers	2,990		683		290		972		69		4,031
Equipment and product sales	970		1		—		1		118		1,089
Total revenues from contracts with customers2	$	3,960	$	683	$	290	$	973	$	187	$	5,120

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			TDS Telecom
Year Ended December 31, 2019	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,650	$	—	$	—	$	—	$	—	$	2,650
Inbound roaming	174		—		—		—		—		174
Residential	—		328		205		533		—		533
Commercial	—		168		41		209		—		209
Wholesale	—		185		—		185		—		185
Other service	137		—		—		(1)		72		208
Service revenues from contracts with customers	2,961		681		246		926		72		3,959
Equipment and product sales	987		1		—		1		129		1,117
Total revenues from contracts with customers2	$	3,948	$	682	$	246	$	927	$	201	$	5,076

			TDS Telecom
Year Ended December 31, 2018	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,623	$	—	$	—	$	—	$	—	$	2,623
Inbound roaming	154		—		—		—		—		154
Residential	—		321		188		509		—		509
Commercial	—		184		42		226		—		226
Wholesale	—		191		—		191		—		191
Other service	135		—		—		(1)		72		206
Service revenues from contracts with customers	2,912		696		230		925		72		3,909
Equipment and product sales	989		2		—		2		119		1,110
Total revenues from contracts with customers2	$	3,901	$	698	$	230	$	927	$	191	$	5,019

Numbers may not foot due to rounding.

1TDS Telecom Total includes eliminations between the Wireline and Cable segments.

2Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.

Contract Balances

For contracts that involve multiple element service and equipment offerings, the transaction price is allocated to each performance obligation based on its relative standalone selling price. When payment is collected in advance of delivery of goods or services, a contract liability is recorded. A contract asset is recorded when revenue is recognized in advance of TDS’ right to receive consideration. Once there is an unconditional right to receive the consideration, TDS bills the customer under the terms of the respective contract and the amounts are recorded as receivables.

TDS recognizes Equipment and product sales revenue when the equipment is delivered to the customer and a corresponding contract asset or liability is recorded for the difference between the amount of revenue recognized and the amount billed to the customer in cases where discounts are offered. The contract asset or liability is reduced over the contract term as service is provided and billed to the customer.

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The following table provides balances for contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet, and contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.

December 31,	2020		2019
(Dollars in millions)
Contract assets	$	13	$	10
Contract liabilities	$	216	$	197

Revenue recognized related to contract liabilities existing at January 1, 2020 was $172 million for the year ended December 31, 2020.

Transaction price allocated to the remaining performance obligations

The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of December 31, 2020, and may vary from actual results. As practical expedients, revenue related to contracts of less than one year, generally month-to-month contracts, and contracts with a fixed per-unit price and variable quantity, are excluded from these estimates.

	Service Revenues
(Dollars in millions)
2021	$	377
2022	160
Thereafter	158
Total	$	695

Contract Cost Assets

TDS expects that commission fees paid as a result of obtaining contracts are recoverable and therefore TDS defers and amortizes these costs. As a practical expedient, costs with an amortization period of one year or less are expensed as incurred. TDS also incurs fulfillment costs, such as installation costs, where there is an expectation that a future benefit will be realized. Deferred commission fees and fulfillment costs are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term. Contract cost asset balances, which are recorded in Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020		2019
(Dollars in millions)
Costs to obtain contracts
Sales commissions	$	139	$	146
Fulfillment costs
Installation costs	10		11
Total contract cost assets	$	149	$	157

Amortization of contract cost assets was $120 million, $126 million and $124 million for the years ended December 31, 2020, 2019 and 2018, respectively, and was included in Selling, general and administrative expenses and Cost of services expenses.

Note 3 Fair Value Measurements

As of December 31, 2020 and 2019, TDS did not have any material financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP.

The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets.

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TDS has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.

	Level within the Fair Value Hierarchy	December 31, 2020				December 31, 2019
		Book Value		Fair Value		Book Value		Fair Value
(Dollars in millions)
Cash and cash equivalents	1	$	1,429	$	1,429	$	465	$	465
Short-term investments	1	3		3		—		—
Long-term debt
Retail	2	2,753		2,809		1,753		1,796
Institutional	2	535		707		534		594
Other	2	230		230		84		84

The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes lease obligations, other installment arrangements, the current portion of Long-term debt and debt financing costs. The fair value of “Retail” Long-term debt was estimated using market prices for TDS’ 7.0% Senior Notes, 6.875% Senior Notes, 6.625% Senior Notes and 5.875% Senior Notes, and UScellular’s 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes, 6.95% Senior Notes, 6.25% Senior Notes issued in August 2020 and 5.5% Senior Notes issued in December 2020. TDS’ “Institutional” debt consists of UScellular’s 6.7% Senior Notes which are traded over the counter. TDS’ “Other” debt consists of senior term loan credit agreements and receivables securitization agreement. TDS estimated the fair value of its Institutional and Other debt through a discounted cash flow analysis using the interest rates or estimated yield to maturity for each borrowing, which ranged from 1.35% to 3.75% and 3.55% to 6.25% at December 31, 2020 and 2019, respectively.

Note 4 Equipment Installment Plans

UScellular sells devices to customers under equipment installment plans over a specified time period. For certain equipment installment plans, after a specified period of time or amount of payments, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract.

The following table summarizes equipment installment plan receivables as of December 31, 2020 and 2019.

December 31,	2020		2019
(Dollars in millions)
Equipment installment plan receivables, gross	$	1,007	$	1,008
Allowance for credit losses	(78)		(84)
Equipment installment plan receivables, net	$	929	$	924
Net balance presented in the Consolidated Balance Sheet as:
Accounts receivable — Customers and agents (Current portion)	$	590	$	587
Other assets and deferred charges (Non-current portion)	339		337
Equipment installment plan receivables, net	$	929	$	924

UScellular uses various inputs, including internal data, information from credit bureaus and other sources, to evaluate the credit profiles of its customers. From this evaluation, a credit class is assigned to the customer that determines the number of eligible lines, the amount of credit available, and the down payment requirement, if any. These credit classes are grouped into four credit categories: lowest risk, lower risk, slight risk and higher risk. A customer's assigned credit class is reviewed periodically and a change is made, if appropriate. An equipment installment plan billed amount is considered past due if not paid within 30 days. The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:

	December 31, 2020										December 31, 2019
	Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total		Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total
(Dollars in millions)
Unbilled	$	819	$	98	$	22	$	9	$	948	$	812	$	99	$	23	$	8	$	942
Billed — current	36		5		1		1		43		37		5		2		1		45
Billed — past due	8		5		2		1		16		11		6		3		1		21
Total	$	863	$	108	$	25	$	11	$	1,007	$	860	$	110	$	28	$	10	$	1,008

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The balance of the equipment installment plan receivables as of December 31, 2020 on a gross basis by year of origination were as follows:

	2018		2019		2020		Total
(Dollars in millions)
Lowest Risk	$	42	$	270	$	551	$	863
Lower Risk	3		28		77		108
Slight Risk	1		6		18		25
Higher Risk	—		2		9		11
Total	$	46	$	306	$	655	$	1,007

 

Activity for the years ended December 31, 2020 and December 31, 2019, in the allowance for credit losses for equipment installment plan receivables was as follows:

	2020		2019
(Dollars in millions)
Allowance for credit losses, beginning of year	$	84	$	77
Bad debts expense	50		82
Write-offs, net of recoveries	(56)		(75)
Allowance for credit losses, end of year	$	78	$	84

Note 5 Income Taxes

TDS’ current income taxes balances at December 31, 2020 and 2019, were as follows:

December 31,	2020		2019
(Dollars in millions)
Federal income taxes receivable	$	180	$	31
Net state income taxes receivable	7		5

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Current
Federal	$	(175)	$	15	$	10
State	4		15		3
Deferred
Federal	179		36		24
State	11		(2)		9
Total income tax expense (benefit)	$	19	$	64	$	46

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A reconciliation of TDS’ income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax rate to TDS’ effective income tax rate is as follows:

Year Ended December 31,	2020				2019				2018
	Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate	$	60	21.0	%	$	44	21.0	%	$	46	21.0	%
State income taxes, net of federal benefit1	11		4.0		12		5.5		11		4.9
Federal income tax rate change2	—		—		—		—		(16)		(7.1)
Change in federal valuation allowance3	—		—		7		3.1		(1)		(0.3)
Loss carryback benefit of CARES Act4	(60)		(21.0)		—		—		—		—
Nondeductible compensation	9		3.0		4		1.9		9		4.1
Tax credits	(2)		(0.6)		(4)		(1.9)		(1)		(0.6)
Other differences, net	1		—		1		0.7		(2)		(1.0)
Total income tax expense (benefit) and rate	$	19	6.4	%	$	64	30.3	%	$	46	21.0	%

1State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to state valuation allowances. 

2The Tax Act reduced the federal income tax rate from 35% to 21% for years after 2017, resulting in a tax benefit in 2018 due primarily to an income tax accounting method change that accelerated tax depreciation on certain assets for the 2017 tax year, pursuant to FASB Accounting Standards Update 2018-05, Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

3Change in federal valuation allowance in 2019 is due primarily to interest expense carryforwards not expected to be realized. The 2018 change also includes interest expense carryforwards not expected to be realized, offset by a change in judgment related to net operating loss carryforwards that became realizable due to an internal restructuring.

4The CARES Act provides a 5-year carryback of net operating losses generated in years 2018-2020. As the statutory federal tax rate applicable to certain years within the carryback period is 35%, carryback to those years provides a tax benefit in excess of the current federal statutory rate of 21%.

Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:

December 31,	2020		2019
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards	$	183	$	168
Lease liabilities	257		251
Asset retirement obligation	81		74
Other	109		106
Total deferred tax assets	630		599
Less valuation allowance	(158)		(152)
Net deferred tax assets	472		447
Deferred tax liabilities
Property, plant and equipment	652		481
Licenses/intangibles	287		261
Partnership investments	144		132
Lease assets	235		226
Other	17		22
Total deferred tax liabilities	1,335		1,122
Net deferred income tax liability	$	863	$	675

At December 31, 2020, TDS and certain subsidiaries had $3,088 million of state NOL carryforwards (generating a $166 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2021 and 2040. TDS and certain subsidiaries had $80 million of federal NOL carryforwards (generating a $17 million deferred tax asset) available to offset future taxable income. The federal NOL carryforwards generally expire between 2021 and 2038, with the exception of federal NOLs generated after 2017, which do not expire. A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized. 

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A summary of TDS' deferred tax asset valuation allowance is as follows:

	2020		2019		2018
(Dollars in millions)
Balance at beginning of year	$	152	$	135	$	147
Charged to Income tax expense	6		17		(5)
Charged to Retained earnings	—		—		(7)
Balance at end of year	$	158	$	152	$	135

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2020		2019		2018
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year	$	49	$	49	$	46
Additions for tax positions of current year	8		8		8
Additions for tax positions of prior years	3		—		2
Reductions for tax positions of prior years	(1)		(7)		(1)
Reductions for settlements of tax positions	—		(1)		—
Reductions for lapses in statutes of limitations	(5)		—		(6)
Unrecognized tax benefits balance at end of year	$	54	$	49	$	49

Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax expense in 2020, 2019 and 2018 by $43 million, $39 million and $39 million, respectively, net of the federal benefit from state income taxes. 

TDS recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense (benefit). The amounts charged to income tax expense related to interest and penalties resulted in an expense of $2 million, $3 million and less than $1 million in 2020, 2019 and 2018, respectively. Net accrued liabilities for interest and penalties were $23 million and $21 million at December 31, 2020 and 2019, respectively, and are included in Other deferred liabilities and credits in the Consolidated Balance Sheet.

TDS and its subsidiaries file federal and state income tax returns. With limited exceptions, TDS is no longer subject to federal and state income tax audits for the years prior to 2017.

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Note 6 Earnings Per Share

Basic earnings per share attributable to TDS shareholders is computed by dividing Net income attributable to TDS shareholders by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share attributable to TDS shareholders is computed by dividing Net income attributable to TDS shareholders by the weighted average number of Common Shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon the exercise of outstanding stock options and the vesting of performance and restricted stock units.

The amounts used in computing basic and diluted earnings per share attributable to TDS shareholders were as follows:

Year Ended December 31,	2020		2019		2018
(Dollars and shares in millions, except per share amounts)
Net income attributable to TDS shareholders used in basic earnings per share	$	226	$	121	$	135
Adjustments to compute diluted earnings:
Noncontrolling interest adjustment	(3)		(1)		(2)
Net income attributable to TDS shareholders used in diluted earnings per share	$	223	$	120	$	133
Weighted average number of shares used in basic earnings per share:
Common Shares	107		107		105
Series A Common Shares	7		7		7
Total	114		114		112
Effects of dilutive securities	1		2		2
Weighted average number of shares used in diluted earnings per share	115		116		114
Basic earnings per share attributable to TDS shareholders	$	1.97	$	1.06	$	1.20
Diluted earnings per share attributable to TDS shareholders	$	1.93	$	1.03	$	1.17

Certain Common Shares issuable upon the exercise of stock options or vesting of performance and restricted stock units were not included in weighted average diluted shares outstanding for the calculation of Diluted earnings per share attributable to TDS shareholders because their effects were antidilutive. The number of such Common Shares excluded was 5 million shares, 2 million shares and 3 million shares for 2020, 2019 and 2018, respectively. 

Note 7 Intangible Assets

Licenses

TDS reviews attractive opportunities to acquire additional wireless spectrum, including pursuant to FCC auctions. TDS also may seek to divest outright or include in exchanges wireless spectrum that is not strategic to its long-term success. Prior to 2009, TDS accounted for UScellular’s share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS’ Licenses. Consequently, UScellular's Licenses on a stand-alone basis do not equal the TDS consolidated Licenses related to UScellular. Activity related to TDS' Licenses is presented below.

	UScellular		Wireline		Cable		Total
(Dollars in millions)
Balance at December 31, 2018	$	2,190	$	2	$	3	$	2,195
Acquisitions	267		—		—		267
Divestitures	(10)		—		—		(10)
Exchanges - Licenses received	26		—		—		26
Capitalized interest	2		—		—		2
Balance at December 31, 2019	2,475		2		3		2,480
Acquisitions	171		—		—		171
Divestitures	(18)		—		—		(18)
Capitalized interest	5		—		—		5
Balance at December 31, 2020	$	2,633	$	2	$	3	$	2,638

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Auction 103

In March 2020, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 237 wireless spectrum licenses in the 37, 39 and 47 GHz bands (Auction 103) for $146 million. In June 2020, the wireless spectrum licenses from Auction 103 were granted by the FCC.

Goodwill

Activity related to TDS' Goodwill is presented below.

	Wireline1		Cable		Total
(Dollars in millions)
Balance at December 31, 2018	$	409	$	100	$	509
Acquisitions	—		38		38
Balance at December 31, 2019	409		138		547
Acquisitions	—		—		—
Balance at December 31, 2020	$	409	$	138	$	547

1Accumulated impairment losses in prior periods were $29 million for Wireline.

Other intangible assets

Activity related to TDS' Other intangible assets is presented below.

	December 31, 2020						December 31, 2019
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
(Dollars in millions)
Franchise rights	$	255	$	(51)	$	204	$	255	$	(34)	$	221
Customer lists and Trade name1	29		(20)		9		49		(31)		18
Total	$	284	$	(71)	$	213	$	304	$	(65)	$	239

1The Customer lists and Trade name balances at December 31, 2019 differ from the amounts reported in Note 8 – Intangible Assets of the 2019 Form 10-K, as the previously reported amounts included certain intangible assets that were fully amortized and had a net book value of zero.

Amortization expense for intangible assets was $26 million, $24 million and $26 million for the years ended December 31, 2020, 2019 and 2018, respectively. Based on the current balance of finite-lived intangible assets, the estimated amortization expense is $21 million, $20 million, $19 million, $17 million and $17 million for the years 2021 through 2025, respectively.

Note 8 Investments in Unconsolidated Entities

Investments in unconsolidated entities consist of amounts invested in entities in which TDS holds a noncontrolling interest. TDS' Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.

December 31,	2020		2019
(Dollars in millions)
Equity method investments:
Capital contributions, loans, advances and adjustments	$	115	$	116
Cumulative share of income	2,278		2,099
Cumulative share of distributions	(1,937)		(1,748)
Total equity method investments	456		467
Measurement alternative method investments	21		21
Total investments in unconsolidated entities	$	477	$	488

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The following tables, which are based on unaudited information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of TDS’ equity method investments:

December 31,	2020		2019
(Dollars in millions)
Assets
Current	$	1,232	$	1,516
Noncurrent	5,908		5,776
Total assets	$	7,140	$	7,292
Liabilities and Equity
Current liabilities	$	646	$	626
Noncurrent liabilities	1,124		1,132
Partners’ capital and shareholders’ equity	5,370		5,534
Total liabilities and equity	$	7,140	$	7,292

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Results of Operations
Revenues	$	6,702	$	6,929	$	6,801
Operating expenses	4,753		5,043		4,985
Operating income	1,949		1,886		1,816
Other income (expense), net	13		(24)		9
Net income	$	1,962	$	1,862	$	1,825

Note 9 Property, Plant and Equipment

TDS’ Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2020 and 2019, were as follows:

December 31,	Useful Lives (Years)	2020		2019
(Dollars in millions)
Land	N/A	$	56	$	57
Buildings	5-40	533		527
Leasehold and land improvements	1-30	1,404		1,314
Cable and wire	15-40	2,195		1,996
Network and switching equipment	3-10	2,634		2,507
Cell site equipment	7-25	4,017		3,708
Office furniture and equipment	3-10	394		387
Other operating assets and equipment	1-12	189		174
System development	1-7	1,709		1,604
Work in process	N/A	528		590
Total property, plant and equipment, gross		13,659		12,864
Accumulated depreciation and amortization		(9,687)		(9,337)
Total property, plant and equipment, net		$	3,972	$	3,527

Depreciation and amortization expense totaled $862 million, $890 million and $839 million in 2020, 2019 and 2018, respectively. In 2020, 2019 and 2018, (Gain) loss on asset disposals, net included charges of $27 million, $12 million and $9 million, respectively, related to disposals of assets, trade-ins of older assets for replacement assets and other retirements of assets from service in the normal course of business.

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Note 10 Leases

Change in Accounting Policy

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases and subsequently amended the standard with several Accounting Standards Updates, collectively referred to as ASC 842. This standard replaces the previous lease accounting standard under ASC 840 - Leases and requires lessees to record a right-of-use (ROU) asset and lease liability for the majority of leases. TDS adopted the provisions of ASC 842 on January 1, 2019, using a modified retrospective method. Under this method, TDS elected to apply the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 842 had no material impact on retained earnings.

Lessee Agreements

A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of TDS’ leases are classified as operating leases, although it does have a small number of finance leases. TDS’ most significant leases are for land and tower spaces, network facilities, retail spaces, and offices.

TDS has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, TDS uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on TDS' unsecured rates, adjusted to approximate the rates at which TDS would be required to borrow on a collateralized basis over a term similar to the recognized lease term. TDS applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. The cost of nonlease components in TDS’ lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price.

Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. TDS’ variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities.

The identified lease term determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of TDS’ leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when TDS is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless TDS is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, TDS has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes.

The following table shows the components of lease cost included in the Consolidated Statement of Operations:

Year Ended December 31,	2020		2019
(Dollars in millions)
Operating lease cost	$	184	$	177
Financing lease cost:
Amortization of ROU assets	2		2
Interest on lease liabilities	1		1
Variable lease cost	11		8
Total lease cost	$	198	$	188

The following table shows supplemental cash flow information related to lease activities:

Year Ended December 31,	2020		2019
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	188	$	172
Operating cash flows from finance leases	1		1
ROU assets obtained in exchange for lease obligations:
Operating leases	$	157	$	132
Finance leases	—		10

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The following table shows the classification of TDS’ finance leases in its Consolidated Balance Sheet:

December 31,	2020		2019
(Dollars in millions)
Finance Leases
Property, plant and equipment	$	20	$	20
Less: Accumulated depreciation and amortization	7		5
Property, plant and equipment, net	$	13	$	15
Current portion of long-term debt	—		1
Long-term debt, net	$	7	$	7
Total finance lease liabilities	$	7	$	8

The table below shows a weighted-average analysis for lease terms and discount rates for all leases:

December 31,	2020		2019
Weighted Average Remaining Lease Term
Operating leases	12 years		12 years
Finance leases	25 years		24 years
Weighted Average Discount Rate
Operating leases	4.1	%	4.4	%
Finance leases	6.2	%	6.3	%

The maturities of lease liabilities are as follows:

	Operating Leases		Finance Leases
(Dollars in millions)
2021	$	169	$	—
2022	168		1
2023	151		1
2024	132		1
2025	100		—
Thereafter	708		15
Total lease payments1	$	1,428	$	18
Less: Imputed interest	359		11
Present value of lease liabilities	$	1,069	$	7

1    Lease payments exclude $54 million of legally binding lease payments for leases signed but not yet commenced.

Lessor Agreements

TDS’ most significant lessor leases are for tower space and colocation space. All of TDS’ lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. TDS’ lessor agreements with lease and nonlease components are generally accounted for separately; however, certain service agreements with insignificant lease components are accounted for as nonlease transactions.

The identified lease term determines the periods to which revenue is allocated over the term of the lease. Many of TDS’ leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when TDS is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise.

Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. TDS’ variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income.

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The following table shows the components of lease income which are included in Service revenues in the Consolidated Statement of Operations:

Year Ended December 31,	2020		2019
(Dollars in millions)
Operating lease income1	$	105	$	100

1During the third quarter of 2019, TDS recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the year ended December 31, 2019. TDS determined that this adjustment was not material to any of the periods impacted.

The maturities of expected lease payments to be received are as follows:

	Operating Leases
(Dollars in millions)
2021	$	93
2022	77
2023	51
2024	35
2025	16
Thereafter	19
Total future lease maturities	$	291

Note 11 Asset Retirement Obligations

UScellular is subject to asset retirement obligations associated with its leased cell sites, switching office sites, retail store sites and office locations. Asset retirement obligations generally include obligations to restore leased land, towers, retail store and office premises to their pre-lease conditions.

TDS Telecom owns poles, cable and wire and certain buildings and also leases office space and property used for housing central office switching equipment and fiber cable. These assets and leases often have removal or remediation requirements associated with them. For example, TDS Telecom’s poles, cable and wire are often located on property that is not owned by TDS Telecom and may be subject to the provisions of easements, permits, or leasing arrangements. Pursuant to the terms of the permits, easements, or leasing arrangements, TDS Telecom is often required to remove these assets and return the property to its original condition at a future date.

Asset retirement obligations are included in Other deferred liabilities and credits in the Consolidated Balance Sheet. 

In 2020 and 2019, UScellular and TDS Telecom performed a review of the assumptions and estimated costs related to asset retirement obligations. The results of the reviews (identified as Revisions in estimated cash outflows) and other changes in asset retirement obligations during 2020 and 2019, were as follows:

	2020		2019
(Dollars in millions)
Balance at beginning of year	$	342	$	307
Additional liabilities accrued	5		13
Revisions in estimated cash outflows	11		2
Acquisition of assets	—		1
Disposition of assets	(1)		(1)
Accretion expense	20		20
Balance at end of year	$	377	$	342

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Note 12 Debt

Revolving Credit Agreements

At December 31, 2020, TDS and UScellular had revolving credit agreements available for general corporate purposes. Amounts under the revolving credit agreements may be borrowed, repaid and reborrowed from time to time until maturity in March 2025. Interest expense representing commitment fees on the unused portion of the revolving lines of credit was $2 million in each of 2020, 2019 and 2018. The commitment fees are based on the unsecured senior debt ratings assigned to TDS and UScellular by certain ratings agencies.

The following table summarizes the revolving credit agreements as of December 31, 2020:

	TDS		UScellular
(Dollars in millions)
Maximum borrowing capacity	$	400	$	300
Letters of credit outstanding	$	1	$	2
Amount borrowed	$	—	$	—
Amount available for use	$	399	$	298

Borrowings under the revolving credit agreements bear interest either at a London Inter-bank Offered Rate (LIBOR) plus 1.50% or at an alternative Base Rate as defined in the revolving credit agreement plus 0.50%, at TDS’ or UScellular’s option. TDS and UScellular may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by TDS or UScellular and approved by the lenders). TDS’ and UScellular’s credit spread and commitment fees on their revolving credit agreements may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. 

In connection with UScellular’s revolving credit agreement, TDS and UScellular entered into a subordination agreement together with the administrative agent for the lenders under UScellular’s revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from UScellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from UScellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105 million and (ii) refinancing indebtedness in excess of $250 million will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under UScellular’s revolving credit agreement. As of December 31, 2020, UScellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement.

The continued availability of the revolving credit agreements requires TDS and UScellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing.

The revolving credit agreements include the following financial covenants:

▪Consolidated Interest Coverage Ratio may not be less than 3.00 to 1.00 as of the end of any fiscal quarter.

▪Consolidated Leverage Ratio may not be greater than 3.25 to 1.00 as of the end of any fiscal quarter.

Certain TDS and UScellular wholly-owned subsidiaries have jointly and severally unconditionally guaranteed the payment and performance of the obligations of TDS and UScellular under the revolving credit agreements. Other subsidiaries that meet certain criteria will be required to provide a similar guaranty in the future. TDS and UScellular believe that they were in compliance with all of the financial and other covenants and requirements set forth in their revolving credit agreements as of December 31, 2020.

Term Loan Agreements

At December 31, 2020, TDS and UScellular had senior term loan credit agreements available for general corporate purposes. The term loans may be drawn in one or more advances by the one-year anniversary of the date of the agreement, which is January 6, 2021 for TDS and June 11, 2021 for UScellular; amounts not drawn by that time will cease to be available.

The following table summarizes the term loan credit agreements as of December 31, 2020:

	TDS		UScellular
(Dollars in millions)
Maximum borrowing capacity	$	200	$	300
Amount borrowed	$	125	$	83
Amount available for use	$	75	$	217

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Borrowings under the TDS term loan bear interest at a rate of LIBOR plus 2.0%. Principal reductions are due and payable in quarterly installments of $0.5 million beginning in June 2021. The remaining unpaid balance will be due and payable in January 2027. In January 2021, TDS borrowed $75 million under the senior term loan credit agreement.

Borrowings under the UScellular term loan bear interest at a rate of LIBOR plus 2.25%. Principal reductions are due and payable in quarterly installments of $0.75 million beginning in September 2021. The remaining unpaid balance will be due and payable in June 2027. In connection with UScellular’s term loan credit agreement, TDS and UScellular entered into a subordination agreement together with the administrative agent for the lenders under UScellular’s term loan credit agreement, which is substantially the same as the subordination agreement for UScellular as described above under the “Revolving Credit Agreements.” As of December 31, 2020, UScellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan agreement pursuant to this subordination agreement.

The senior term loan credit agreements contain financial covenants and subsidiary guarantees that are consistent with the revolving credit agreements described above. TDS and UScellular believe that they were in compliance with all of the financial and other covenants and requirements set forth in their term loan credit agreements as of December 31, 2020.

Receivables Securitization Agreement

At December 31, 2020, UScellular had a receivables securitization agreement for securitized borrowings using its equipment installment receivables for general corporate purposes. Amounts under the receivables securitization agreement may be borrowed, repaid and reborrowed from time to time until maturity in December 2022, which may be extended from time to time as specified therein. The outstanding borrowings bear interest at floating rates. In April 2020, UScellular borrowed $125 million under its receivables securitization agreement. In October 2020, UScellular amended and restated its agreement to increase its total borrowing capacity to $300 million. In December 2020, UScellular repaid $100 million of the outstanding borrowing. As of December 31, 2020, the outstanding borrowings under the agreement were $25 million and the unused capacity was $275 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement. As of December 31, 2020, the USCC Master Note Trust held $205 million of assets available to be pledged as collateral for the receivables securitization agreement. Interest expense representing commitment fees on the unused portion of the agreement was $1 million in each of 2020, 2019 and 2018.

In connection with entering into the receivables securitization agreement in 2017, UScellular formed a wholly-owned subsidiary, USCC Master Note Trust (Trust), which qualifies as a bankruptcy remote entity. Under the terms of the agreement, UScellular, through its subsidiaries, transfers eligible equipment installment receivables to the Trust. The Trust then utilizes the transferred assets as collateral for notes payables issued to third party financial institutions. Since UScellular retains effective control of the transferred assets in the Trust, any activity associated with this receivables securitization agreement will be treated as a secured borrowing. Therefore, TDS will continue to report equipment installment receivables and any related balances on the Consolidated Balance Sheet. Cash received from borrowings under the receivables securitization agreement will be reported as Debt. Refer to Note 15 — Variable Interest Entities for additional information.

UScellular entered into a performance guaranty whereby UScellular guarantees the performance of certain wholly-owned subsidiaries of UScellular under the receivables securitization agreement. 

The continued availability of the receivables securitization agreement requires UScellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and provide representations on certain matters at the time of each borrowing. The covenants include the same financial covenants for UScellular as described above under the “Revolving Credit Agreements.” TDS believes that UScellular was in compliance as of December 31, 2020, with all of the financial covenants and requirements set forth in its receivables securitization agreement.

Other Long-Term Debt

In August 2020, UScellular issued $500 million of 6.25% Senior Notes due 2069, and received cash proceeds of $483 million after payment of debt issuance costs of $17 million. These funds will be used for general corporate purposes.

In December 2020, UScellular issued $500 million of 5.5% Senior Notes due 2070, and received cash proceeds of $483 million after payment of debt issuance costs of $17 million. These funds will be used for general corporate purposes.

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Long-term debt as of December 31, 2020 and 2019, was as follows:

				December 31, 2020						December 31, 2019
	Issuance date	Maturity date	Call date (any time on or after)	Principal Amount		Less Unamortized discounts and debt issuance costs		Total		Principal Amount		Less Unamortized discount and debt issuance costs		Total
(Dollars in millions)
TDS Unsecured Senior Notes
6.625%	Mar 2005	Mar 2045	Mar 2010	$	116	$	3	$	113	$	116	$	3	$	113
6.875%	Nov 2010	Nov 2059	Nov 2015	225		7		218		225		7		218
7.000%	Mar 2011	Mar 2060	Mar 2016	300		9		291		300		9		291
5.875%	Dec 2012	Dec 2061	Dec 2017	195		7		188		195		7		188
UScellular Unsecured Senior Notes
6.700%	Dec 2003 and June 2004	Dec 2033	Dec 2003 and June 2004	$	544	$	13	$	531	$	544	$	13	$	531
6.950%	May 2011	May 2060	May 2016	342		11		331		342		11		331
7.250%	Dec 2014	Dec 2063	Dec 2019	275		10		265		275		10		265
7.250%	Nov 2015	Dec 2064	Dec 2020	300		10		290		300		10		290
6.250%	Aug 2020	Sep 2069	Sep 2025	500		17		483		—		—		—
5.500%	Dec 2020	Mar 2070	Mar 2026	500		17		483		—		—		—
UScellular Term Loan				83		3		80		83		1		82
TDS Term Loan				125		2		123		—		—		—
EIP Securitization				25		—		25		—		—		—
Finance lease obligations				7		—		7		8		—		8
Installment payment agreement				—		—		—		8		1		7
Other long-term notes				1		—		1		2		—		2
Total long-term debt				$	3,538	$	109	$	3,429	$	2,398	$	72	$	2,326
Long-term debt, current								$	5					$	10
Long-term debt, noncurrent								$	3,424					$	2,316

TDS may redeem its callable notes and UScellular may redeem its 6.95% Senior Notes, 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes, 6.25% Senior Notes and 5.5% Senior Notes, in whole or in part at any time after the respective call date, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest. UScellular may redeem the 6.7% Senior Notes, in whole or in part, at any time prior to maturity at a redemption price equal to the greater of (a) 100% of the principal amount of such notes, plus accrued and unpaid interest, or (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 30 basis points.

Interest on the Senior Notes outstanding at December 31, 2020, is payable quarterly, with the exception of UScellular's 6.7% Senior Notes for which interest is payable semi-annually. 

The annual requirements for principal payments on long-term debt are approximately $5 million, $30 million, $5 million, $5 million and $5 million for the years 2021 through 2025, respectively.

The covenants associated with TDS and its subsidiaries’ long-term debt obligations, among other things, restrict TDS’ ability, subject to certain exclusions, to incur additional liens, enter into sale and leaseback transactions, and sell, consolidate or merge assets.

TDS’ and UScellular’s long-term debt notes do not contain any provisions resulting in acceleration of the maturities of outstanding debt in the event of a change in TDS’ or UScellular’s credit rating.

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Note 13 Employee Benefit Plans

Defined Contribution Plans

TDS sponsors a qualified noncontributory defined contribution pension plan. The plan provides benefits for certain employees of TDS Corporate, TDS Telecom and UScellular. Under this plan, pension costs are calculated separately for each participant and are funded annually. Total pension costs were $16 million in 2020, $17 million in 2019 and $16 million in 2018. In addition, TDS sponsors a defined contribution retirement savings plan (401(k) plan). Total costs incurred from TDS’ contributions to the 401(k) plan were $27 million in 2020, $25 million in 2019 and $28 million in 2018.

TDS also sponsors an unfunded nonqualified deferred supplemental executive retirement plan for certain employees to offset the reduction of benefits caused by the limitation on annual employee compensation under the tax laws.

Other Post-Retirement Benefits

TDS sponsors a defined benefit post-retirement plan that provides medical benefits to retirees and that covers certain employees of TDS Corporate and TDS Telecom, which is not significant to TDS’ financial position or operating results. The plan is contributory, with retiree contributions adjusted annually. TDS recognizes the funded status of the plan as a component of Other assets and deferred charges in the Consolidated Balance Sheet as of December 31, 2020 and 2019. Changes in the funded status are included in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheet before affecting such amounts for income taxes to the extent that such changes are not recognized in earnings as a component of net periodic benefit cost. 

The post-retirement benefit fund invests mainly in mutual funds that hold U.S. equities, international equities, and debt securities. The post-retirement benefit fund does not hold any debt or equity securities issued by TDS, UScellular or any related parties. The fair value of the plan assets of the post-retirement benefit fund was $69 million and $63 million as of December 31, 2020 and 2019, respectively. The total plan benefit obligations were $57 million and $55 million as of December 31, 2020 and 2019, respectively. Therefore, the total funded status was an asset of $12 million and $8 million as of December 31, 2020 and 2019, respectively.

TDS is not required to set aside current funds for its future retiree health insurance benefits. The decision to contribute to the plan assets is based upon several factors, including the funded status of the plan, market conditions, alternative investment opportunities, tax benefits and other circumstances. In accordance with applicable income tax regulations, annual contributions to fund the costs of future retiree medical benefits may not exceed certain thresholds. TDS has not determined whether it will make a contribution to the plan in 2021.

Note 14 Commitments and Contingencies

Indemnifications

TDS enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require TDS to perform under these indemnities are transaction specific; however, these agreements may require TDS to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. TDS is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, TDS has not made any significant indemnification payments under such agreements.

Legal Proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.

TDS accrued less than $1 million and $2 million with respect to legal proceedings and unasserted claims as of December 31, 2020 and 2019, respectively. TDS is unable to estimate any contingent loss in excess of the amounts accrued.

In April 2018, the United States Department of Justice (DOJ) notified TDS that it was conducting inquiries of UScellular and TDS under the federal False Claims Act relating to UScellular’s participation in wireless spectrum license auctions 58, 66, 73 and 97 conducted by the FCC. UScellular is/was a limited partner in several limited partnerships which qualified for the 25% bid credit in each auction. The investigation arose from civil actions under the Federal False Claims Act brought by private parties in the U.S. District Court for the Western District of Oklahoma. In November and December 2019, following the DOJ’s investigation, the DOJ informed TDS and UScellular that it would not intervene in the above-referenced actions. Subsequently, the private party plaintiffs filed amended complaints in both actions in the U.S. District Court for the Western District of Oklahoma and are continuing the action on their own. In July 2020, these actions were transferred to the U.S. District Court for the District of Columbia. TDS and UScellular believe that UScellular’s arrangements with the limited partnerships and the limited partnerships’ participation in the FCC auctions complied with applicable law and FCC rules. At this time, TDS cannot predict the outcome of any proceeding.

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Other Commitments

Subsequent to December 31, 2020, UScellular committed to purchase wireless spectrum licenses for approximately $1,460 million inclusive of associated costs, subject to regulatory approval.

Note 15 Variable Interest Entities

Consolidated VIEs

TDS consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. TDS reviews the criteria for a controlling financial interest at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in TDS’ Form 10-K for the year ended December 31, 2020.

UScellular formed USCC EIP LLC (Seller/Sub-Servicer), USCC Receivables Funding LLC (Transferor) and the Trust, collectively the special purpose entities (SPEs), to facilitate a securitized borrowing using its equipment installment plan receivables. Under a Receivables Sale Agreement, UScellular wholly-owned, majority-owned and unconsolidated entities, collectively referred to as “affiliated entities”, transfer device equipment installment plan contracts to the Seller/Sub-Servicer. The Seller/Sub-Servicer aggregates device equipment installment plan contracts, and performs servicing, collection and all other administrative activities related to accounting for the equipment installment plan contracts. The Seller/Sub-Servicer sells the eligible equipment installment plan receivables to the Transferor, a bankruptcy remote entity, which subsequently sells the receivables to the Trust. The Trust, which is bankruptcy remote and isolated from the creditors of UScellular, will be responsible for issuing asset-backed variable funding notes (Notes), which are collateralized by the equipment installment plan receivables owned by the Trust. Given that UScellular has the power to direct the activities of these SPEs, and that these SPEs lack sufficient equity to finance their activities, UScellular is deemed to have a controlling financial interest in the SPEs and, therefore, consolidates them. All transactions with third parties (e.g., issuance of the asset-backed variable funding notes) will be accounted for as a secured borrowing due to the pledging of equipment installment plan contracts as collateral, significant continuing involvement in the transferred assets, subordinated interests of the cash flows, and continued evidence of control of the receivables. Refer to Note 12 — Debt, Receivables Securitization Agreement for additional details regarding the securitization agreement for which these entities were established.    

The following VIEs were formed to participate in FCC auctions of wireless spectrum licenses and to fund, establish, and provide wireless service with respect to any FCC wireless spectrum licenses won in the auctions:

▪Advantage Spectrum, L.P. (Advantage Spectrum) and Sunshine Spectrum, Inc., the general partner of Advantage Spectrum; and

▪King Street Wireless, L.P. (King Street Wireless) and King Street Wireless, Inc., the general partner of King Street Wireless.

These particular VIEs are collectively referred to as designated entities. The power to direct the activities that most significantly impact the economic performance of these VIEs is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships. The general partner of each partnership needs the consent of the limited partner, an indirect TDS subsidiary, to sell or lease certain wireless spectrum licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of these VIEs is shared, TDS has the most significant level of exposure to the variability associated with the economic performance of the VIEs, indicating that TDS is the primary beneficiary of the VIEs. Therefore, in accordance with GAAP, these VIEs are consolidated.

TDS also consolidates other VIEs that are limited partnerships that provide wireless service. A limited partnership is a variable interest entity unless the limited partners hold substantive participating rights or kick-out rights over the general partner. For certain limited partnerships, UScellular is the general partner and manages the operations. In these partnerships, the limited partners do not have substantive kick-out or participating rights and, further, such limited partners do not have the authority to remove the general partner. Therefore, these limited partnerships also are recognized as VIEs and are consolidated under the variable interest model.

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The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in TDS’ Consolidated Balance Sheet.

December 31,	2020		2019
(Dollars in millions)
Assets
Cash and cash equivalents	$	18	$	19
Short-term investments	3		—
Accounts receivable	638		637
Inventory, net	3		5
Other current assets	21		7
Licenses	637		647
Property, plant and equipment, net	99		95
Operating lease right-of-use assets	37		42
Other assets and deferred charges	347		347
Total assets	$	1,803	$	1,799
Liabilities
Current liabilities	$	26	$	30
Long-term operating lease liabilities	34		39
Other deferred liabilities and credits	19		13
Total liabilities	$	79	$	82

Unconsolidated VIEs

TDS manages the operations of and holds a variable interest in certain other limited partnerships, but is not the primary beneficiary of these entities and, therefore, does not consolidate them under the variable interest model.

TDS’ total investment in these unconsolidated entities was $5 million at both December 31, 2020 and 2019, and is included in Investments in unconsolidated entities in TDS’ Consolidated Balance Sheet. The maximum exposure from unconsolidated VIEs is limited to the investment held by TDS in those entities.

Other Related Matters

TDS made contributions, loans or advances to its VIEs totaling $111 million, $255 million and $152 million during 2020, 2019 and 2018, respectively; of which $83 million in 2020, $214 million in 2019 and $116 million in 2018 are related to USCC EIP LLC as discussed above. TDS may agree to make additional capital contributions and/or advances to these or other VIEs and/or to their general partners to provide additional funding for operations or the development of wireless spectrum licenses granted in various auctions. TDS may finance such amounts with a combination of cash on hand, borrowings under its revolving credit or receivables securitization agreements and/or other long-term debt. There is no assurance that TDS will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support.

The limited partnership agreement of Advantage Spectrum also provides the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of UScellular, to purchase its interest in the limited partnership. The general partner’s put option related to its interest in Advantage Spectrum will be exercisable in 2021, and if not exercised at that time, will be exercisable in 2022. The greater of the carrying value of the general partner's investment or the value of the put option, net of any borrowings due to TDS, is recorded as Noncontrolling interests with redemption features in TDS’ Consolidated Balance Sheet. Also in accordance with GAAP, minority share of income or changes in the redemption value of the put option, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in TDS’ Consolidated Statement of Operations.

During the first quarter of 2018, TDS recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $6 million and decreasing Net income attributable to TDS shareholders by $6 million in 2018. TDS determined that this adjustment was not material to any of the periods impacted.

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Note 16 Noncontrolling Interests

The following schedule discloses the effects of Net income attributable to TDS shareholders and changes in TDS’ ownership interest in UScellular on TDS’ equity:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Net income attributable to TDS shareholders	$	226	$	121	$	135
Transfers (to) from noncontrolling interests
Change in TDS’ Capital in excess of par value from UScellular's issuance of UScellular shares	(38)		(23)		(30)
Change in TDS’ Capital in excess of par value from UScellular’s repurchases of UScellular shares	14		6		—
Purchase of ownership in subsidiaries from noncontrolling interests	(9)		—		—
Net transfers (to) from noncontrolling interests	(33)		(17)		(30)
Net income attributable to TDS shareholders after transfers (to) from noncontrolling interests	$	193	$	104	$	105

Mandatorily Redeemable Noncontrolling Interests in Finite-Lived Subsidiaries

TDS’ consolidated financial statements include certain noncontrolling interests that meet the GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable noncontrolling interests represent interests held by third parties in consolidated partnerships, where the terms of the underlying partnership agreement provide for a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest holders and TDS in accordance with the respective partnership agreements. The termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2092.

The estimated aggregate amount that would be due and payable to settle all of these noncontrolling interests, assuming an orderly liquidation of the finite-lived consolidated partnerships on December 31, 2020, net of estimated liquidation costs, is $20 million. This amount excludes redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated Balance Sheet. The estimate of settlement value was based on certain factors and assumptions which are subjective in nature. Changes in those factors and assumptions could result in a materially larger or smaller settlement amount. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2020, was $6 million, and is included in Noncontrolling interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the unrecognized appreciation of the noncontrolling interest holders’ share of the underlying net assets in the consolidated partnerships. Neither the noncontrolling interest holders’ share, nor TDS’ share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the consolidated financial statements.

Note 17 Common Shareholders’ Equity

Common Stock

Series A Common Shares are convertible on a share-for-share basis into Common Shares. In matters other than the election of directors, each Series A Common Share is entitled to ten votes per share, compared to one vote for each Common Share. The Series A Common Shares are entitled to elect eight directors, and the Common Shares elect four. TDS has reserved 7,284,000 Common Shares at December 31, 2020, for possible issuance upon conversion of Series A Common Shares.

The following table summarizes the number of Common and Series A Common Shares issued.

	Common Shares	Series A Common Shares	Common Treasury Shares
(Shares in millions)
Balance at December 31, 2017	126	7	22
Dividend reinvestment, incentive and compensation plans	—	—	(3)
Balance at December 31, 2018	126	7	19
Dividend reinvestment, incentive and compensation plans	—	—	(1)
Balance at December 31, 2019	126	7	18
Repurchase of Common Shares	—	—	1
Balance at December 31, 2020	126	7	19

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On August 2, 2013, the Board of Directors of TDS authorized a $250 million stock repurchase program for the purchase of TDS Common Shares from time to time pursuant to open market purchases, block transactions, private purchases or otherwise, depending on market conditions. This authorization does not have an expiration date. As of December 31, 2020, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $185 million.

In November 2009, UScellular announced by Form 8-K that the Board of Directors of UScellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. In December 2016, the UScellular Board amended this authorization to provide that, beginning on January 1, 2017, the authorized repurchase amount with respect to a particular year will be any amount from zero to 1,300,000 Common Shares, as determined by the Pricing Committee of the Board of Directors, and that if the Pricing Committee did not specify an amount for any year, such amount would be zero for such year. The Pricing Committee has not specified any increase in the authorization since that time. The Pricing Committee also was authorized to decrease the cumulative amount of the authorization at any time, but has not taken any action to do so at this time. As of December 31, 2020, the total cumulative amount of Common Shares authorized to be purchased is 4,507,000. The authorization provides that share repurchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions. This authorization does not have an expiration date.

Tax-Deferred Savings Plan

At December 31, 2020,TDS has reserved 90,000 Common Shares for issuance under the TDS Tax-Deferred Savings Plan, a qualified profit‑sharing plan pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code. Participating employees have the option of investing their contributions and TDS’ contributions in a TDS Common Share fund, a UScellular Common Share fund or certain unaffiliated funds.

Note 18 Stock-Based Compensation

TDS Consolidated

The following table summarizes stock-based compensation expense recognized during 2020, 2019 and 2018:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Stock option awards	$	3	$	3	$	5
Restricted stock unit awards	30		33		30
Performance share unit awards	17		21		17
Deferred compensation bonus and matching stock unit awards	1		—		—
Awards under Non-Employee Director compensation plan	2		2		2
Total stock-based compensation, before income taxes	53		59		54
Income tax benefit	(13)		(15)		(14)
Total stock-based compensation expense, net of income taxes	$	40	$	44	$	40

At December 31, 2020, unrecognized compensation cost for all stock‑based compensation awards was $55 million and is expected to be recognized over a weighted average period of 2.0 years.

The following table provides a summary of the classification of stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,	2020		2019		2018
(Dollars in millions)
Selling, general and administrative expense	$	48	$	54	$	49
Cost of services expense	5		5		5
Total stock-based compensation	$	53	$	59	$	54

TDS’ tax benefits realized from the exercise of stock options and the vesting of other awards totaled $10 million in 2020.

TDS (Excluding UScellular)

The information in this section relates to stock‑based compensation plans using the equity instruments of TDS. Participants in these plans are employees of TDS Corporate and TDS Telecom and Non-employee Directors of TDS. Information related to plans using the equity instruments of UScellular are shown in the UScellular section following the TDS section.

Under the TDS Long-Term Incentive Plans, TDS may grant fixed and performance-based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees.

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TDS had reserved 17,025,000 Common Shares at December 31, 2020, for equity awards granted and to be granted under the TDS Long-Term Incentive Plans in effect. At December 31, 2020, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, performance share awards and deferred compensation stock unit awards.

TDS has also established a Non-Employee Directors’ compensation plan under which it has reserved 182,000 TDS Common Shares at December 31, 2020, for issuance as compensation to members of the Board of Directors who are not employees of TDS.

TDS uses treasury stock to satisfy requirements for shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plan – Stock Options

Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over periods up to three years from the date of grant. Stock options outstanding at December 31, 2020, expire between 2021 and 2030. However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of TDS common stock on the date of grant.

TDS estimated the fair value of stock options granted in 2020, 2019 and 2018 using the Black-Scholes valuation model and the assumptions shown in the table below:

	2020		2019		2018
Expected life	6.2 years		6.2 years		6.3 years
Expected annual volatility rate	35.0	%	29.0	%	28.6	%
Dividend yield	3.6	%	2.1	%	2.5	%
Risk-free interest rate	0.5	%	2.4	%	2.9	%

Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving considerations to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. TDS believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on historical volatility of TDS’ common stock over a period commensurate with the expected life. The dividend yield assumption is equal to the dividends declared in the most recent year as a percentage of the share price on the date of grant. The risk-free interest rate assumption is determined using the U.S. Treasury Yield Curve Rate with a term length that approximates the expected life of the stock options.

A summary of TDS stock options (total and portion exercisable) and changes during 2020 is presented in the tables and narrative below.

Common Share Options	Number of Options	Weighted Average Exercise Prices		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2019	4,091,000	$	26.63
Granted	387,000	$	19.15
Forfeited	(4,000)	$	26.64
Expired	(188,000)	$	26.90
Outstanding at December 31, 2020	4,286,000	$	25.94	$	—	4.7
(3,176,000 exercisable)		$	26.50	$	—	3.4

The weighted average grant date fair value per share of the TDS stock options granted in 2020, 2019 and 2018 was $4.24, $7.70 and $6.33, respectively. The aggregate intrinsic value of TDS stock options exercised in 2019 and 2018 was $7 million and $14 million, respectively. There were no TDS stock options exercised in 2020. The aggregate intrinsic value at December 31, 2020, presented in the table above represents the total pre-tax intrinsic value (the difference between TDS’ closing stock prices and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all options been exercised on December 31, 2020.

Long-Term Incentive Plans – Restricted Stock Units

TDS also grants restricted stock unit awards to key employees. Each outstanding restricted stock unit is convertible into one Common Share Award. The restricted stock unit awards currently outstanding were granted in 2018, 2019 and 2020 and will vest in 2021, 2022 and 2023, respectively.

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TDS estimates the fair value of restricted stock units by reducing the grant-date price of TDS’ shares by the present value of the dividends expected to be paid on the underlying shares during the requisite service period, discounted at the appropriate risk-free interest rate, since employees are not entitled to dividends declared on the underlying shares while the restricted stock is unvested. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. 

A summary of TDS nonvested restricted stock units and changes during 2020 is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,233,000	$	26.16
Granted	661,000	$	17.19
Vested	(377,000)	$	25.99
Forfeited	(21,000)	$	24.89
Nonvested at December 31, 2020	1,496,000	$	22.26

The total fair values as of the respective vesting dates of restricted stock units vested during 2020, 2019 and 2018 were $7 million, $11 million and $9 million, respectively. The weighted average grant date fair value per share of the restricted stock units granted in 2020, 2019 and 2018 was $17.19, $28.81 and $23.87, respectively.

Long-Term Incentive Plans – Performance Share Units

Beginning in 2016, TDS granted performance share units to certain TDS executive officers, and beginning in 2019, to certain key TDS Corporate and TDS Telecom employees. Each recipient may be entitled to shares of TDS common stock equal to 0% to 200% of a communicated target award depending on the achievement of predetermined performance-based and market-based operating targets over three years. Performance-based operating targets for the TDS awards include Total Revenue and Return on Capital. Market-based operating targets are measured against TDS’ total shareholder return relative to a defined peer group. Performance-based operating targets for the TDS Telecom employees' awards include Total Revenue, Return on Capital and Adjusted EBITDA Margin Percent. Performance shares accumulate dividend equivalents, which are forfeitable if the performance metrics are not achieved. If the predetermined performance-based and market-based operating targets are met, the TDS units granted in 2018, 2019 and 2020 will vest in 2021, 2022 and 2023, respectively, and the TDS Telecom employees' units granted in 2019 and 2020 will vest in 2022 and 2023, respectively.

TDS estimates fair value of performance-based operating targets using TDS’ closing stock price on the date of grant. An estimate of the number of performance units expected to vest based upon achieving the performance-based operating targets is made and the fair value is expensed on a straight-line basis over the requisite service period. Each reporting period these estimates are reviewed and stock compensation expense is adjusted accordingly to reflect the new estimates of total units expected to vest. If any part of the performance share units do not vest as a result of the established performance-based operating targets not being achieved, the related stock compensation expense is reversed.

TDS estimates the market-based operating target’s fair value using an internally developed valuation model. This estimated fair value approximated TDS’ closing stock price at the date of grant for market-based share units granted in 2020, 2019 and 2018. This market-based operating target value determined at the date of grant is expensed on a straight-line basis over the requisite service period and the stock compensation expense is not adjusted during the performance period for the subsequent changes in the value of the market-based unit awards and will not be reversed even if the market-based operating target is not achieved.

A summary of TDS nonvested performance share units and changes during 2020 is presented in the table below:

Common Performance Share Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	489,000	$	28.53
Granted	521,000	$	19.15
Vested	(63,000)	$	27.79
Change in units based on approved performance factors	4,000	$	27.79
Forfeited	(55,000)	$	27.83
Accumulated dividend equivalents	28,000	$	23.91
Nonvested at December 31, 2020	924,000	$	23.18

The total fair value of performance share units that vested during 2020 and 2019 was $2 million and $4 million, respectively. No performance share units vested during 2018. The weighted average grant date fair value per share of the performance share units granted in 2020, 2019 and 2018 was $19.15, $30.72 and $25.70, respectively.

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Long-Term Incentive Plans – Deferred Compensation Stock Units

Certain TDS employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in TDS Common Share units. The amount of TDS’ matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% stock unit match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in TDS Common Share units and vest over three years.

The total fair values of deferred compensation stock units that vested during 2020, 2019 and 2018 were less than $1 million in each respective year. The weighted average grant date fair value per share of the deferred compensation stock units granted in 2020, 2019 and 2018 was $19.44, $31.05 and $28.96, respectively. As of December 31, 2020, there were 107,000 vested but unissued deferred compensation stock units valued at $2 million.

Compensation of Non-Employee Directors

TDS issued 43,000, 28,000 and 32,000 Common Shares under its Non-Employee Director plan in 2020, 2019 and 2018, respectively.

Dividend Reinvestment Plans

TDS had reserved 2,393,000 Common Shares at December 31, 2020, for issuance under Automatic Dividend Reinvestment and Stock Purchase Plans and 129,000 Series A Common Shares for issuance under the Series A Common Share Automatic Dividend Reinvestment Plan. These plans enabled holders of TDS’ Common Shares to reinvest cash dividends in Common Shares and holders of Series A Common Shares to reinvest cash dividends in Series A Common Shares. The purchase price of the shares is 95% of the market value, based on the average of the daily high and low sales prices for TDS’ Common Shares on the New York Stock Exchange for the ten trading days preceding the date on which the purchase is made. These plans are considered non-compensatory plans; therefore, no compensation expense is recognized for stock issued under these plans.

UScellular

The information in this section relates to stock‑based compensation plans using the equity instruments of UScellular. Participants in these plans are employees of UScellular and Non-employee Directors of UScellular. Information related to plans using the equity instruments of TDS are shown in the previous section.

UScellular has established the following stock‑based compensation plans: Long-Term Incentive Plans and a Non-Employee Director compensation plan.

Under the UScellular Long-Term Incentive Plans, UScellular may grant fixed and performance-based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2020, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, performance share awards and deferred compensation stock unit awards.

Under the Non-Employee Director compensation plan, UScellular may grant Common Shares to members of the Board of Directors who are not employees of UScellular or TDS.

At December 31, 2020, UScellular had reserved 12,193,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans and 105,000 Common Shares for issuance under the Non-Employee Director compensation plan.

UScellular uses treasury stock to satisfy requirements for Common Shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plans – Stock Options

UScellular's last stock option grant occurred in 2016.

Stock options outstanding, and the related weighted average exercise price, at December 31, 2020 and 2019 were 418,000 units at $42.23 and 460,000 units at $42.20, respectively. All stock options are exercisable and expire between 2021 and 2026.

The aggregate intrinsic value of UScellular stock options exercised in 2019 and 2018 was $3 million and $19 million, respectively. No stock options were exercised in 2020.

Long-Term Incentive Plans – Restricted Stock Units

Restricted stock unit awards granted to key employees generally vest after three years. The restricted stock unit awards currently outstanding were granted in 2018, 2019 and 2020 and will vest in 2021, 2022 and 2023, respectively.

UScellular estimates the fair value of restricted stock units based on the closing market price of UScellular shares on the date of grant. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

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A summary of UScellular nonvested restricted stock units and changes during 2020 is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,461,000	$	40.90
Granted	1,020,000	$	29.18
Vested	(653,000)	$	35.54
Forfeited	(168,000)	$	34.81
Nonvested at December 31, 2020	1,660,000	$	36.43

The total fair value of restricted stock units that vested during 2020, 2019 and 2018 was $20 million, $25 million and $16 million, respectively. The weighted average grant date fair value per share of the restricted stock units granted in 2020, 2019 and 2018 was $29.18, $46.81 and $38.19, respectively.

Long-Term Incentive Plans – Performance Share Units

Beginning in 2017, UScellular granted performance share units to key employees. The performance share units generally vest after three years. Each recipient may be entitled to shares of UScellular common stock equal to 50% to 200% of a communicated target award depending on the achievement of predetermined performance-based operating targets over the performance period, which is generally a one-year period beginning on January 1 in the year of grant to December 31 in the year of grant. The remaining time through the end of the vesting period is considered the “time-based period”. Performance-based operating targets for grants made prior to 2020 include Simple Free Cash Flow, Consolidated Total Operating Revenues and Postpaid Handset Voluntary Defections, and for grants made during 2020 include Consolidated Total Service Revenues, Consolidated Operating Cash Flow, Consolidated Capital Expenditures and Postpaid Handset Voluntary Defections. Subject to vesting during the time-based period, the performance share unit award agreement provides that in no event shall the award be less than 50% of the target opportunity as of the grant date. The performance share units currently outstanding were granted in 2018, 2019 and 2020 and will vest in 2021, 2022 and 2023, respectively.

Additionally, UScellular granted performance share units during 2020 to a newly appointed President and Chief Executive Officer. The recipient may be entitled to shares of UScellular common stock equal to 100% of the communicated target award depending on the achievement of predetermined performance-based operating targets over the performance period, which is any two calendar-year period commencing no earlier than January 1, 2021 and ending no later than December 31, 2026. Performance-based operating targets include Average Total Revenue Growth and Average Annual Return on Capital. If one, or both, of the performance targets are not satisfied, the award will be forfeited.

UScellular estimates the fair value of performance share units using UScellular’s closing stock price on the date of grant. An estimate of the number of performance share units expected to vest based upon achieving the performance-based operating targets is made and the aggregate fair value is expensed on a straight-line basis over the requisite service period. Each reporting period, during the performance period, the estimate of the number of performance share units expected to vest is reviewed and stock compensation expense is adjusted as appropriate to reflect the revised estimate of the aggregate fair value of the performance share units expected to vest. 

A summary of UScellular’s nonvested performance share units and changes during 2020 is presented in the table below:

Common Performance Share Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,245,000	$	40.16
Granted	582,000	$	29.71
Vested	(398,000)	$	36.92
Change in units based on approved performance factors	20,000	$	46.43
Forfeited	(144,000)	$	40.05
Nonvested at December 31, 2020	1,305,000	$	36.60

The total fair value of performance share units that vested during 2020 and 2019 was $11 million and less than $1 million, respectively. No performance share units vested during 2018. The weighted average grant date fair value per share of the performance share units granted in 2020, 2019 and 2018 was $29.71, $46.43 and $38.81, respectively.

Long-Term Incentive Plans – Deferred Compensation Stock Units

Certain UScellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in UScellular Common Share stock units. The amount of UScellular’s matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in UScellular Common Share stock units and vest over three years.

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The total fair value of deferred compensation stock units that vested during 2020 was $1 million. The total fair value of deferred compensation stock units that vested during 2019 and 2018 was less than $1 million in each respective year. The weighted average grant date fair value per share of the deferred compensation stock units granted in 2020 and 2018 was $31.79 and $40.72, respectively. There were no deferred compensation stock units granted during 2019. As of December 31, 2020, there were 63,000 vested but unissued deferred compensation stock units valued at $2 million.

Compensation of Non-Employee Directors

UScellular issued 19,000, 13,000 and 18,000 Common Shares in 2020, 2019 and 2018, respectively, under its Non-Employee Director compensation plan. 

Note 19 Business Segment Information

UScellular and TDS Telecom are billed for services they receive from TDS, consisting primarily of information processing, accounting and finance, and general management services. Such billings are based on expenses specifically identified to UScellular and TDS Telecom and on allocations of common expenses. Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to UScellular and TDS Telecom are reflected in the accompanying business segment information on a basis that is representative of what they would have been if UScellular and TDS Telecom operated on a stand-alone basis.

Financial data for TDS’ reportable segments for 2020, 2019 and 2018, is as follows. See Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements for additional information.

			TDS Telecom
Year ended or as of December 31, 2020	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	3,067	$	684	$	292	$	975	$	94	$	4,136
Equipment and product sales	970		1		—		1		118		1,089
Total operating revenues	4,037		685		292		976		212		5,225
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	782		269		123		392		70		1,244
Cost of equipment and products	1,011		1		—		1		98		1,110
Selling, general and administrative	1,368		199		72		270		43		1,681
Depreciation, amortization and accretion	683		124		78		203		23		909
(Gain) loss on asset disposals, net	25		—		1		1		1		27
(Gain) loss on license sales and exchanges, net	(5)		—		—		—		—		(5)
Operating income (loss)	173		92		18		110		(24)		259
Equity in earnings of unconsolidated entities	179		—		—		—		2		181
Interest and dividend income	8		4		1		5		2		15
Gain (loss) on investments	2		—		—		—		—		2
Interest expense	(112)		4		—		4		(60)		(168)
Other, net	—		(1)		—		(1)		—		(1)
Income (loss) before income taxes	250		99		18		117		(79)		288
Income tax expense (benefit)2	17						18		(16)		19
Net income (loss)	233						100		(64)		269
Add back:
Depreciation, amortization and accretion	683		124		78		203		23		909
(Gain) loss on asset disposals, net	25		—		1		1		1		27
(Gain) loss on license sales and exchanges, net	(5)		—		—		—		—		(5)
Gain (loss) on investments	(2)		—		—		—		—		(2)
Interest expense	112		(4)		—		(4)		60		168
Income tax expense (benefit)2	17						18		(16)		19
Adjusted EBITDA3	$	1,063	$	220	$	97	$	317	$	5	$	1,385
Investments in unconsolidated entities	$	435	$	4	$	—	$	4	$	38	$	477
Total assets	$	9,681	$	1,641	$	730	$	2,359	$	485	$	12,525
Capital expenditures	$	940	$	293	$	75	$	368	$	9	$	1,317

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			TDS Telecom
Year Ended or as of December 31, 2019	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	3,035	$	682	$	247	$	928	$	96	$	4,059
Equipment and product sales	987		1		—		1		129		1,117
Total operating revenues	4,022		683		247		930		224		5,176
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	756		263		105		368		78		1,202
Cost of equipment and products	1,028		1		—		1		106		1,135
Selling, general and administrative	1,406		199		62		260		51		1,717
Depreciation, amortization and accretion	702		132		68		200		30		932
(Gain) loss on asset disposals, net	19		(8)		1		(7)		—		12
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		—		(1)
Operating income (loss)	112		96		11		107		(40)		179
Equity in earnings of unconsolidated entities	166		—		—		—		2		168
Interest and dividend income	17		10		2		12		—		29
Interest expense	(110)		3		—		3		(58)		(165)
Income (loss) before income taxes	185		110		13		122		(96)		211
Income tax expense (benefit)2	52						30		(18)		64
Net income (loss)	133						92		(78)		147
Add back:
Depreciation, amortization and accretion	702		132		68		200		30		932
(Gain) loss on asset disposals, net	19		(8)		1		(7)		—		12
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		—		(1)
Interest expense	110		(3)		—		(3)		58		165
Income tax expense (benefit)2	52						30		(18)		64
Adjusted EBITDA3	$	1,015	$	231	$	82	$	313	$	(9)	$	1,319
Investments in unconsolidated entities	$	447	$	4	$	—	$	4	$	37	$	488
Total assets4	$	8,164	$	1,471	$	734	$	2,196	$	421	$	10,781
Capital expenditures	$	710	$	243	$	73	$	316	$	6	$	1,032

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			TDS Telecom
Year Ended or as of December 31, 2018	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	2,978	$	697	$	230	$	925	$	96	$	3,999
Equipment and product sales	989		2		—		2		119		1,110
Total operating revenues	3,967		699		230		927		215		5,109
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	758		266		104		369		79		1,206
Cost of equipment and products	1,031		1		—		1		98		1,130
Selling, general and administrative	1,388		197		57		254		52		1,694
Depreciation, amortization and accretion	640		142		69		212		31		883
(Gain) loss on asset disposals, net	10		(3)		1		(2)		1		9
(Gain) loss on license sales and exchanges, net	(18)		—		—		—		—		(18)
Operating income (loss)	158		95		(2)		93		(46)		205
Equity in earnings of unconsolidated entities	159		—		—		—		1		160
Interest and dividend income	15		7		1		8		3		26
Interest expense	(116)		2		—		2		(58)		(172)
Other, net	(1)		3		—		2		1		2
Income (loss) before income taxes	215		106		(1)		105		(99)		221
Income tax expense (benefit)2	51						16		(21)		46
Net income (loss)	164						89		(78)		175
Add back:
Depreciation, amortization and accretion	640		142		69		212		31		883
(Gain) loss on asset disposals, net	10		(3)		1		(2)		1		9
(Gain) loss on license sales and exchanges, net	(18)		—		—		—		—		(18)
Interest expense	116		(2)		—		(2)		58		172
Income tax expense (benefit)2	51						16		(21)		46
Adjusted EBITDA3	$	963	$	243	$	70	$	313	$	(9)	$	1,267
Investments in unconsolidated entities	$	441	$	4	$	—	$	4	$	35	$	480
Total assets	$	7,274	$	1,304	$	639	$	1,934	$	575	$	9,783
Capital expenditures	$	515	$	176	$	56	$	232	$	20	$	767

Numbers may not foot due to rounding.

1TDS Telecom Total includes eliminations between the Wireline and Cable segments.

2Income tax expense (benefit) is not provided at the individual segment level for Wireline and Cable. TDS calculates income tax expense for “TDS Telecom Total”.

3Adjusted earnings before interest, taxes, depreciation, amortization and accretion (Adjusted EBITDA) is a segment measure reported to the chief operating decision maker for purposes of assessing their performance. Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation above. TDS believes Adjusted EBITDA is a useful measure of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. 

4As of January 1, 2019, UScellular adopted ASC 842 using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2019 includes the impacts of ASC 842, but prior periods remain as previously reported. See Note 10 — Leases for additional information.

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Note 20 Supplemental Cash Flow Disclosures

Following are supplemental cash flow disclosures regarding interest paid and income taxes paid.

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Interest paid	$	160	$	162	$	168
Income taxes paid, net of refunds received	(23)		44		40

Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, TDS and UScellular withhold shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. TDS and UScellular then pay the amount of the required tax withholdings to the taxing authorities in cash.

TDS:
Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Common Shares withheld	153,000		814,000		676,000
Aggregate value of Common Shares withheld	$	3	$	29	$	21
Cash receipts upon exercise of stock options	—		2		48
Cash disbursements for payment of taxes	(3)		(8)		(6)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(3)	$	(6)	$	42

UScellular:
Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Common Shares withheld	376,000		452,000		1,550,000
Aggregate value of Common Shares withheld	$	11	$	23	$	73
Cash receipts upon exercise of stock options	—		1		29
Cash disbursements for payment of taxes	(11)		(10)		(11)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(11)	$	(9)	$	18

Note 21 Certain Relationships and Related Transactions

The following persons are partners of Sidley Austin LLP, the principal law firm of TDS and its subsidiaries: Walter C.D. Carlson, a trustee and beneficiary of a voting trust that controls TDS, the non-executive Chairman of the Board and member of the Board of Directors of TDS and a director of UScellular, a subsidiary of TDS and certain subsidiaries of TDS; and Stephen P. Fitzell, the General Counsel and/or an Assistant Secretary of TDS and UScellular and certain other subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS or its subsidiaries. TDS, UScellular and their subsidiaries incurred legal costs from Sidley Austin LLP of $11 million, $10 million and $10 million in 2020, 2019 and 2018, respectively.

The Audit Committee of the Board of Directors of TDS is responsible for the review and evaluation of all related-party transactions as such term is defined by the rules of the New York Stock Exchange.

81

Reports of Management

Management’s Responsibility for Financial Statements

Management of Telephone and Data Systems, Inc. has the responsibility for preparing the accompanying consolidated financial statements and for their integrity and objectivity. The statements were prepared in accordance with accounting principles generally accepted in the United States of America and, in management’s opinion, were fairly presented. The financial statements included amounts that were based on management’s best estimates and judgments. Management also prepared the other information in the annual report and is responsible for its accuracy and consistency with the financial statements.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited these consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and has expressed herein its unqualified opinion on these financial statements.

/s/ LeRoy T. Carlson, Jr.	/s/ Peter L. Sereda
LeRoy T. Carlson, Jr.	Peter L. Sereda
President and Chief Executive Officer	Executive Vice President and Chief Financial Officer
(principal executive officer)	(principal financial officer)
/s/ Anita J. Kroll
Anita J. Kroll
Vice President - Controller and Chief Accounting Officer
(principal accounting officer)

82

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. TDS’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). TDS’ internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and, where required, the Board of Directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the issuer’s assets that could have a material effect on the interim or annual consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of TDS’ management, including its principal executive officer and principal financial officer, TDS conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2020, based on the criteria established in the 2013 version of Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has concluded that TDS maintained effective internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 version of Internal Control — Integrated Framework issued by the COSO.

The effectiveness of TDS’ internal control over financial reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in the firm’s report included herein.

/s/ LeRoy T. Carlson, Jr.	/s/ Peter L. Sereda
LeRoy T. Carlson, Jr.	Peter L. Sereda
President and Chief Executive Officer	Executive Vice President and Chief Financial Officer
(principal executive officer)	(principal financial officer)
/s/ Anita J. Kroll
Anita J. Kroll
Vice President - Controller and Chief Accounting Officer
(principal accounting officer)

83

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Telephone and Data Systems, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Telephone and Data Systems, Inc. and its subsidiaries (“the Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 10 and 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenue from contracts with customers in 2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment - Wireline Reporting Unit

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $547 million as of December 31, 2020, of which $409 million relates to the Wireline reporting unit. Management performs its annual impairment assessment as of November 1 of each year or more frequently if there are events or circumstances that cause management to believe it is more likely than not that the carrying value of individual reporting unit exceeds the respective fair value. Goodwill impairment loss is measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. The discounted cash flow approach and guideline public company method was used to value the Wireline reporting unit for the annual impairment test. As disclosed by management, the discounted cash flow approach uses various inputs and considers current economic factors as well as risks specific to the industry and the reporting unit. The significant assumptions made by management in this process were the revenue growth rates, the terminal revenue growth rate and the discount rate. The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the respective reporting unit to determine fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value used for impairment testing. Based on the annual impairment assessment performed, Wireline did not have an impairment of its goodwill in 2020.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment for the Wireline reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value of the reporting unit; (ii) a high degree of auditor judgment, subjectivity, effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, terminal revenue growth rate, and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s annual goodwill impairment assessment, including controls over the valuation of the Wireline reporting unit. These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the Wireline reporting unit; (ii) evaluating the appropriateness of the discounted cash flow model and guideline public company method; (iii) testing the completeness and accuracy of underlying data used in the model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, terminal revenue growth rate, and the discount rate. Evaluating management’s assumptions related to the revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the terminal growth rate and discount rate assumptions.

Intangible Asset Impairment Assessment – Wireless Spectrum Licenses (UScellular Licenses)

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s consolidated licenses balance was $2,638 million as of December 31, 2020, of which $2,633 million relates to the UScellular licenses. Management performs its annual impairment assessment of licenses as of November 1 of each year or more frequently if there are events or circumstances that cause management to believe it is more likely than not that the carrying value of licenses exceeds fair value. A qualitative impairment assessment was performed as of November 1, 2020, to determine whether the wireless spectrum licenses were impaired. As disclosed by management, the qualitative assessment considered several qualitative factors, including analyst estimates of wireless spectrum license values which contemplated recent spectrum auction results, recent UScellular and other market participant transactions and other industry and market factors. Based on this assessment, management concluded that it was not more likely than not that the carrying value of the wireless spectrum licenses in each unit of accounting exceeded their respective fair values. Therefore, no quantitative impairment evaluation was completed.

The principal considerations for our determination that performing procedures relating to the intangible asset impairment assessment for the UScellular licenses is a critical audit matter are (i) the significant judgment by management when performing the qualitative impairment assessment; and (ii) a high degree of auditor judgment and subjectivity in performing procedures and evaluating management’s qualitative impairment assessment.

85

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s annual intangible asset impairment assessment, including management’s review of qualitative factors affecting the UScellular licenses. These procedures also included, among others, evaluating management’s qualitative assessment by (i) obtaining analyst estimates of wireless spectrum license values; and (ii) considering recent UScellular and other market participant transactions and external market and industry data.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 18, 2021

We have served as the Company’s auditor since 2002.

86

Telephone and Data Systems, Inc.

Shareholder Information

Stock and Dividend Information

TDS' Common Shares are listed on the New York Stock Exchange under the symbol “TDS.” As of January 29, 2021, the last trading day of the month, TDS Common Shares were held by 1,586 record owners, and the Series A Common Shares were held by 68 record owners.

TDS has paid cash dividends on its common stock since 1974, and paid dividends of $0.68 per Common and Series A Common Share during 2020. During 2019, TDS paid dividends of $0.66 per Common and Series A Common Share.

The Common Shares of United States Cellular Corporation, an 82%-owned subsidiary of TDS, are listed on the NYSE under the symbol “USM.”

Stock Performance Graph

The following chart provides a comparison of TDS’ cumulative total return to shareholders (stock price appreciation plus dividends) during the previous five years to the returns of the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones U.S. Telecommunications Index.

Note: Cumulative total return assumes reinvestment of dividends.

	2015		2016		2017		2018		2019		2020
Telephone and Data Systems Common Shares (NYSE: TDS)	$	100	$	113.94	$	112.36	$	134.36	$	107.51	$	81.38
S&P 500 Index	100		111.96		136.40		130.42		171.49		203.04
Dow Jones U.S. Telecommunications Index	100		123.96		123.61		115.30		147.45		138.72

The comparison above assumes $100.00 invested at the close of trading on the last trading day preceding the first day of 2015, in TDS Common Shares, S&P 500 Index and the Dow Jones U.S. Telecommunications Index.

Dividend Reinvestment Plan

TDS’ dividend reinvestment plans provide its common shareholders with a convenient and economical way to participate in the future growth of TDS. Holders of record of ten (10) or more Common Shares may purchase Common Shares with their reinvested dividends at a five percent discount from market price. Common Shares may also be purchased on a monthly basis through optional cash payments by participants in this plan. The initial ten (10) shares cannot be purchased directly from TDS. An authorization card and prospectus will be mailed automatically by the transfer agent to all registered record holders with ten (10) or more shares. Once enrolled in the plan, there are no brokerage commissions or service charges for purchases made under the plan. 

87

Investor relations

TDS’ annual report, SEC filings and news releases are available to investors, securities analysts and other members of the investment community. These reports are provided, without charge, upon request to our Investor Relations department at the address below. Investors may also access these and other reports through the Investor Relations portion of the TDS website (www.tdsinc.com). 

Questions regarding lost, stolen or destroyed certificates, consolidation of accounts, transferring of shares and name or address changes should be directed to:

Julie Mathews, IRC, Director — Investor Relations

Telephone and Data Systems, Inc.

30 North LaSalle Street, Suite 4000

Chicago, IL 60602

julie.mathews@tdsinc.com 

General inquiries by investors, securities analysts and other members of the investment community should be directed to:

Jane W. McCahon, Senior Vice President — Corporate Relations and Corporate Secretary

Telephone and Data Systems, Inc.

30 North LaSalle Street, Suite 4000

Chicago, IL 60602

jane.mccahon@tdsinc.com 

Directors and executive officers

See “Election of Directors” and “Executive Officers” sections of the Proxy Statement issued in 2021 for the 2021 Annual Meeting.

Principal counsel

Sidley Austin LLP, Chicago, Illinois

Transfer agent

Computershare Trust Company, N.A.

462 South 4th Street, Suite 1600

Louisville, KY 40202

877.337.1575

Independent registered public accounting firm

PricewaterhouseCoopers LLP

Visit TDS' web site at www.tdsinc.com 

88

EX-21

Exhibit 21

TELEPHONE AND DATA SYSTEMS, INC.

SUBSIDIARY COMPANIES

December 31, 2020

SUBSIDIARY COMPANIES		STATE OF ORGANIZATION
UScellular
	UNITED STATES CELLULAR CORPORATION	DELAWARE
	BANGOR CELLULAR TELEPHONE, L.P.	DELAWARE
	CALIFORNIA RURAL SERVICE AREA #1, INC.	CALIFORNIA
	CEDAR RAPIDS CELLULAR TELEPHONE, L.P.	DELAWARE
	CELLVEST, INC.	DELAWARE
	CENTRAL CELLULAR TELEPHONES, LTD.	ILLINOIS
	CHAMPLAIN CELLULAR, INC.	NEW YORK
	COMMUNITY CELLULAR TELEPHONE COMPANY	TEXAS
	CROWN POINT CELLULAR, INC.	NEW YORK
	DUBUQUE CELLULAR TELEPHONE, L.P.	DELAWARE
	HARDY CELLULAR TELEPHONE COMPANY	DELAWARE
	IOWA RSA # 3, INC.	DELAWARE
	IOWA RSA # 9, INC.	DELAWARE
	IOWA RSA # 12, INC.	DELAWARE
	JACKSONVILLE CELLULAR PARTNERSHIP	NORTH CAROLINA
	JACKSONVILLE CELLULAR TELEPHONE COMPANY	NORTH CAROLINA
	KANSAS #15 LIMITED PARTNERSHIP	DELAWARE
	KENOSHA CELLULAR TELEPHONE, L.P.	DELAWARE
	LAB465, LLC	ILLINOIS
	MADISON CELLULAR TELEPHONE COMPANY	WISCONSIN
	MAINE RSA # 1, INC.	MAINE
	MAINE RSA # 4, INC.	MAINE
	MCDANIEL CELLULAR TELEPHONE COMPANY	DELAWARE
	MINNESOTA INVCO OF RSA # 7, INC.	DELAWARE
	NEWPORT CELLULAR, INC.	NEW YORK
	NH #1 RURAL CELLULAR, INC.	NEW HAMPSHIRE
	OREGON RSA #2, INC.	OREGON
	PCS WISCONSIN, LLC	WISCONSIN
	RACINE CELLULAR TELEPHONE COMPANY	WISCONSIN
	TENNESSEE NO. 3, LIMITED PARTNERSHIP	TENNESSEE
	TEXAHOMA CELLULAR LIMITED PARTNERSHIP	TEXAS
	TEXAS INVCO OF RSA # 6, INC.	DELAWARE
	TOWNSHIP CELLULAR TELEPHONE, INC.	DELAWARE
	UNITED STATES CELLULAR INVESTMENT CO. OF OKLAHOMA CITY, LLC.	OKLAHOMA
	UNITED STATES CELLULAR INVESTMENT COMPANY, LLC	DELAWARE
	UNITED STATES CELLULAR INVESTMENT CORPORATION OF LOS ANGELES	INDIANA
	UNITED STATES CELLULAR OPERATING COMPANY LLC	DELAWARE
	UNITED STATES CELLULAR OPERATING COMPANY OF BANGOR	MAINE
	UNITED STATES CELLULAR OPERATING COMPANY OF CEDAR RAPIDS	DELAWARE
	UNITED STATES CELLULAR OPERATING COMPANY OF CHICAGO, LLC	DELAWARE
	UNITED STATES CELLULAR OPERATING COMPANY OF DUBUQUE	IOWA
	UNITED STATES CELLULAR OPERATING COMPANY OF KNOXVILLE	TENNESSEE

	UNITED STATES CELLULAR OPERATING COMPANY OF MEDFORD	OREGON
	UNITED STATES CELLULAR OPERATING COMPANY OF YAKIMA	WASHINGTON
	UNITED STATES CELLULAR TELEPHONE COMPANY (GREATER KNOXVILLE), L.P.	TENNESSEE
	USCC DISTRIBUTION CO., LLC	DELAWARE
	USCC EIP LLC	DELAWARE
	USCC FINANCIAL L.L.C.	ILLINOIS
	USCC FIRST RESPONDER, INC.	DELAWARE
	USCC MASTER NOTE TRUST	DELAWARE
	USCC PURCHASE, LLC	DELAWARE
	USCC RECEIVABLES FUNDING LLC	DELAWARE
	USCC SERVICES, LLC	DELAWARE
	USCC WIRELESS INVESTMENT, INC.	DELAWARE
	USCCI CORPORATION	DELAWARE
	USCIC OF FRESNO	CALIFORNIA
	USCOC NEBRASKA/KANSAS, INC.	DELAWARE
	USCOC NEBRASKA/KANSAS, LLC	DELAWARE
	USCOC OF CENTRAL ILLINOIS, LLC	ILLINOIS
	USCOC OF CHICAGO REAL ESTATE HOLDINGS, LLC	DELAWARE
	USCOC OF CUMBERLAND, LLC	DELAWARE
	USCOC OF GREATER IOWA, LLC	DELAWARE
	USCOC OF GREATER MISSOURI, LLC	DELAWARE
	USCOC OF GREATER NORTH CAROLINA, LLC	DELAWARE
	USCOC OF GREATER OKLAHOMA, LLC	OKLAHOMA
	USCOC OF JACKSONVILLE, LLC	DELAWARE
	USCOC OF LACROSSE, LLC	WISCONSIN
	USCOC OF OREGON RSA # 5, INC.	DELAWARE
	USCOC OF PENNSYLVANIA RSA NO. 10-B2, LLC	DELAWARE
	USCOC OF RICHLAND, INC.	WASHINGTON
	USCOC OF SOUTH CAROLINA RSA # 4, INC.	SOUTH CAROLINA
	USCOC OF TEXAHOMA, INC.	TEXAS
	USCOC OF VIRGINIA RSA # 3, INC.	VIRGINIA
	USCOC OF WASHINGTON-4, INC.	DELAWARE
	VERMONT RSA NO. 2-B2, INC.	DELAWARE
	WASHINGTON RSA # 5, INC.	WASHINGTON
	WESTELCOM CELLULAR, INC.	NEW YORK
	WESTERN SUB-RSA LIMITED PARTNERSHIP	DELAWARE
	YAKIMA MSA LIMITED PARTNERSHIP	DELAWARE
TDS TELECOMMUNICATIONS
	TDS TELECOMMUNICATIONS LLC	DELAWARE
INCUMBENT LOCAL EXCHANGE COMPANIES
	AMELIA TELEPHONE CORPORATION	VIRGINIA
	ARCADIA TELEPHONE COMPANY	OHIO
	ARIZONA TELEPHONE COMPANY	ARIZONA
	ARVIG TELEPHONE COMPANY	MINNESOTA
	ASOTIN TELEPHONE COMPANY	WASHINGTON
	BADGER TELECOM, LLC	DELAWARE
	BLACK EARTH TELEPHONE COMPANY, LLC	DELAWARE
	BLUE RIDGE TELEPHONE COMPANY	GEORGIA
	BONDUEL TELEPHONE COMPANY, LLC	DELAWARE

BRIDGE WATER TELEPHONE COMPANY	MINNESOTA
BURLINGTON, BRIGHTON & WHEATLAND TELEPHONE COMPANY, LLC	DELAWARE
BUTLER TELEPHONE COMPANY, INC.	ALABAMA
CALHOUN CITY TELEPHONE COMPANY, INC.	MISSISSIPPI
CAMDEN TELEPHONE AND TELEGRAPH COMPANY, INC.	GEORGIA
CAMDEN TELEPHONE COMPANY, INC.	INDIANA
CENTRAL STATE TELEPHONE COMPANY, LLC	DELAWARE
CHATHAM TELEPHONE COMPANY	MICHIGAN
COBBOSSEECONTEE TELEPHONE COMPANY	MAINE
COMMUNICATION CORPORATION OF MICHIGAN	MICHIGAN
COMMUNICATIONS CORPORATION OF INDIANA	INDIANA
COMMUNICATIONS CORPORATION OF SOUTHERN INDIANA	INDIANA
CONCORD TELEPHONE EXCHANGE, INC.	TENNESSEE
CONTINENTAL TELEPHONE COMPANY	OHIO
DELTA COUNTY TELE-COMM, INC.	COLORADO
DEPOSIT TELEPHONE COMPANY, INC.	NEW YORK
DICKEYVILLE TELEPHONE, LLC	DELAWARE
EASTCOAST TELECOM OF WISCONSIN, LLC	DELAWARE
EDWARDS TELEPHONE COMPANY, INC.	NEW YORK
GRANTLAND TELECOM, LLC	DELAWARE
HAMPDEN TELEPHONE COMPANY	MAINE
HAPPY VALLEY TELEPHONE COMPANY	CALIFORNIA
HARTLAND & ST. ALBANS TELEPHONE COMPANY	MAINE
HOLLIS TELEPHONE COMPANY, INC.	NEW HAMPSHIRE
HOME TELEPHONE COMPANY, INC.	INDIANA
HORNITOS TELEPHONE CO.	CALIFORNIA
HUMPHREYS COUNTY TELEPHONE COMPANY	TENNESSEE
ISLAND TELEPHONE COMPANY	MICHIGAN
KEARSARGE TELEPHONE COMPANY	NEW HAMPSHIRE
LESLIE COUNTY TELEPHONE COMPANY	KENTUCKY
LEWIS RIVER TELEPHONE COMPANY, INC.	WASHINGTON
LEWISPORT TELEPHONE COMPANY	KENTUCKY
LITTLE MIAMI COMMUNICATIONS CORPORATION	OHIO
LUDLOW TELEPHONE COMPANY	VERMONT
MAHANOY & MAHANTANGO TELEPHONE COMPANY	PENNSYLVANIA
MCCLELLANVILLE TELEPHONE COMPANY, INC.	SOUTH CAROLINA
MCDANIEL TELEPHONE COMPANY	WASHINGTON
MERRIMACK COUNTY TELEPHONE COMPANY	NEW HAMPSHIRE
MID-AMERICA TELEPHONE, LLC	OKLAHOMA
MID-PLAINS TELEPHONE, LLC	DELAWARE
MID-STATE TELEPHONE COMPANY	MINNESOTA
MIDWAY TELEPHONE COMPANY, LLC	DELAWARE
MOSINEE TELEPHONE COMPANY, LLC	DELAWARE
MT. VERNON TELEPHONE COMPANY, LLC	DELAWARE
MYRTLE TELEPHONE COMPANY, INC.	MISSISSIPPI
NELSON-BALL GROUND TELEPHONE COMPANY	GEORGIA
NEW CASTLE TELEPHONE COMPANY	VIRGINIA
NORTHFIELD TELEPHONE COMPANY	VERMONT
NORWAY TELEPHONE COMPANY, INC.	SOUTH CAROLINA
OAKMAN TELEPHONE COMPANY, INC.	ALABAMA
OAKWOOD TELEPHONE COMPANY	OHIO

	OKLAHOMA COMMUNICATION SYSTEMS, LLC	OKLAHOMA
	PEOPLES TELEPHONE COMPANY, INC.	ALABAMA
	PERKINSVILLE TELEPHONE COMPANY, INC.	VERMONT
	PORT BYRON TELEPHONE COMPANY	NEW YORK
	POTLATCH TELEPHONE COMPANY	IDAHO
	QUINCY TELEPHONE COMPANY	FLORIDA
	RIVERSIDE TELECOM, LLC	DELAWARE
	S & W TELEPHONE COMPANY, INC.	INDIANA
	SALEM TELEPHONE COMPANY	KENTUCKY
	SCANDINAVIA TELEPHONE COMPANY, LLC	DELAWARE
	SHIAWASSEE TELEPHONE COMPANY	MICHIGAN
	SOMERSET TELEPHONE COMPANY	MAINE
	SOUTHEAST MISSISSIPPI TELEPHONE COMPANY, INC.	MISSISSIPPI
	SOUTHEAST TELEPHONE CO. OF WISCONSIN, LLC	DELAWARE
	SOUTHWESTERN TELEPHONE COMPANY	ARIZONA
	ST. STEPHEN TELEPHONE COMPANY	SOUTH CAROLINA
	STOCKBRIDGE & SHERWOOD TELEPHONE COMPANY, LLC.	DELAWARE
	STRASBURG TELEPHONE COMPANY	COLORADO
	SUGAR VALLEY TELEPHONE COMPANY	PENNSYLVANIA
	TELLICO TELEPHONE COMPANY, INC.	TENNESSEE
	TENNESSEE TELEPHONE COMPANY	TENNESSEE
	TENNEY TELEPHONE COMPANY, LLC	DELAWARE
	THE FARMERS TELEPHONE COMPANY, LLC	DELAWARE
	THE HOME TELEPHONE COMPANY OF PITTSBORO, INC.	INDIANA
	THE ISLAND TELEPHONE COMPANY	MAINE
	THE MERCHANTS AND FARMERS TELEPHONE COMPANY	INDIANA
	THE STATE LONG DISTANCE TELEPHONE COMPANY, LLC	DELAWARE
	THE VANLUE TELEPHONE COMPANY	OHIO
	THE WEST PENOBSCOT TELEPHONE & TELEGRAPH COMPANY	MAINE
	TIPTON TELEPHONE COMPANY, INC.	INDIANA
	TOWNSHIP TELEPHONE COMPANY, INC.	NEW YORK
	TRI-COUNTY TELEPHONE COMPANY, INC.	INDIANA
	UNION TELEPHONE COMPANY	NEW HAMPSHIRE
	UTELCO, LLC	DELAWARE
	VERNON TELEPHONE COMPANY, INC.	NEW YORK
	VIRGINIA TELEPHONE COMPANY	VIRGINIA
	WARREN TELEPHONE COMPANY	MAINE
	WAUNAKEE TELEPHONE COMPANY, LLC	DELAWARE
	WEST POINT TELEPHONE COMPANY, INCORPORATED	INDIANA
	WILLISTON TELEPHONE COMPANY	SOUTH CAROLINA
	WILTON TELEPHONE COMPANY, INC.	NEW HAMPSHIRE
	WINSTED TELEPHONE COMPANY	MINNESOTA
	WINTERHAVEN TELEPHONE COMPANY	CALIFORNIA
	WOLVERINE TELEPHONE COMPANY	MICHIGAN
OTHER COMPANIES
	TDS LONG DISTANCE CORPORATION	DELAWARE
	TDS METROCOM, LLC	DELAWARE
	TDS PURCO LLC	DELAWARE
	TDS TELECOM SERVICE LLC	IOWA
	TRI-COUNTY COMMUNICATIONS CORPORATION	INDIANA

TDS GROUP
	AFFILIATE FUND	DELAWARE
	AIRADIGM COMMUNICATIONS, INC.	WISCONSIN
	INTERLINX COMMUNICATION, LLC	DELAWARE
	M.C.T. COMMUNICATIONS, INC.	NEW HAMPSHIRE
	NATIONAL TELEPHONE & TELEGRAPH COMPANY	DELAWARE
	ONENECK DATA CENTER HOLDINGS LLC	DELAWARE
	ONENECK IT SOLUTIONS LLC	DELAWARE
	SUTTLE-STRAUS, INC.	WISCONSIN
	TDS BROADBAND LLC	DELAWARE
	TDS BROADBAND SERVICE LLC	DELAWARE
	TONAQUINT NETWORKS, LLC	DELAWARE
	ZOLO BROADCASTING LLC	DELAWARE

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-231181, 333-219697, 333-219698, and 333-236609) and Form S-8 (Nos. 333-58127, 333-179702, 333-179703, 333-185143, 333-197793, 333-226550, and 333-241703) of Telephone and Data Systems, Inc. of our report dated February 18, 2021, relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the 2020 Annual Report to Shareholders, which is incorporated by reference in this Annual Report on Form 10-K.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 18, 2021

EX-31.1

Exhibit 31.1

Certification of principal executive officer

I, LeRoy T. Carlson, Jr., certify that:

1.I have reviewed this annual report on Form 10-K of Telephone and Data Systems, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 18, 2021

/s/ LeRoy T. Carlson, Jr.

LeRoy T. Carlson, Jr.
President and Chief Executive Officer
(principal executive officer)

EX-31.2

Exhibit 31.2

Certification of principal financial officer

I, Peter L. Sereda, certify that:

1.I have reviewed this annual report on Form 10-K of Telephone and Data Systems, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 18, 2021

/s/ Peter L. Sereda

Peter L. Sereda
Executive Vice President and Chief Financial Officer
(principal financial officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 1350 of Chapter 63

ofTitle 18 of the United States Code

I, LeRoy T. Carlson, Jr., the principal executive officer of Telephone and Data Systems, Inc., certify that (i) the annual report on Form 10-K for the year ended December 31, 2020, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Telephone and Data Systems, Inc.

/s/ LeRoy T. Carlson, Jr.

LeRoy T. Carlson, Jr.

February 18, 2021

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Telephone and Data Systems, Inc. and will be retained by Telephone and Data Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 1350 of Chapter 63

ofTitle 18 of the United States Code

I, Peter L. Sereda, the principal financial officer of Telephone and Data Systems, Inc., certify that (i) the annual report on Form 10-K for the year ended December 31, 2020, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Telephone and Data Systems, Inc.

/s/ Peter L. Sereda

Peter L. Sereda

February 18, 2021

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Telephone and Data Systems, Inc. and will be retained by Telephone and Data Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2020	Jan. 31, 2021	Jun. 30, 2020
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Document Transition Report	false
Entity File Number	001-14157
Entity Registrant Name	TELEPHONE AND DATA SYSTEMS, INC.
Entity Central Index Key	0001051512
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-2669023
Entity Address, Address Line One	30 North LaSalle Street, Suite 4000
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60602
City Area Code	(312)
Local Phone Number	630-1900
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Common Shares
Title of 12(b) Security	Common Shares, $.01 par value
Trading Symbol	TDS
Security Exchange Name	NYSE
Entity Public Float			$ 1,000
Share Price			$ 19.88
Entity Common Stock, Shares Outstanding		107,084,600
6.625% Senior Notes
Title of 12(b) Security	6.625% Senior Notes due 2045
Trading Symbol	TDI
Security Exchange Name	NYSE
6.875% Senior Notes
Title of 12(b) Security	6.875% Senior Notes due 2059
Trading Symbol	TDE
Security Exchange Name	NYSE
7.0% Senior Notes
Title of 12(b) Security	7.000% Senior Notes due 2060
Trading Symbol	TDJ
Security Exchange Name	NYSE
5.875% Senior Notes
Title of 12(b) Security	5.875% Senior Notes due 2061
Trading Symbol	TDA
Security Exchange Name	NYSE
Series A Common Shares
Entity Common Stock, Shares Outstanding		7,281,200
Series A Common Shares | Maximum
Entity Public Float			$ 1

XML

Consolidated Statement Of Operations - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating revenues
Total operating revenues	$ 5,225	$ 5,176	$ 5,109
Operating expenses
Selling, general and administrative	1,681	1,717	1,694
Depreciation, amortization and accretion	909	932	883
(Gain) loss on asset disposals, net	27	12	9
(Gain) loss on sale of business and other exit costs, net	0	(1)	0
(Gain) loss on license sales and exchanges, net	(5)	0	(18)
Total operating expenses	4,966	4,997	4,904
Operating income	259	179	205
Investment and other income (expense)
Equity in earnings of unconsolidated entities	181	168	160
Interest and dividend income	15	29	26
Gain (loss) on investments	2	0	0
Interest expense	(168)	(165)	(172)
Other, net	(1)	0	2
Total investment and other income	29	32	16
Income before income taxes	288	211	221
Income tax expense	19	64	46
Net income	269	147	175
Less: Net income attributable to noncontrolling interests, net of tax	43	26	40
Net income attributable to TDS shareholders	$ 226	$ 121	$ 135
Basic weighted average shares outstanding (in shares)	114	114	112
Basic earnings per share attributable to TDS shareholders (in dollars per share)	$ 1.97	$ 1.06	$ 1.20
Diluted weighted average shares outstanding (in shares)	115	116	114
Diluted earnings per share attributable to TDS shareholders (in dollars per share)	$ 1.93	$ 1.03	$ 1.17
Service
Operating revenues
Total operating revenues	$ 4,136	$ 4,059	$ 3,999
Operating expenses
Cost of goods and services sold	1,244	1,202	1,206
Equipment and product sales
Operating revenues
Total operating revenues	1,089	1,117	1,110
Operating expenses
Cost of goods and services sold	$ 1,110	$ 1,135	$ 1,130

XML

Consolidated Statement Of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 269	$ 147	$ 175
Change related to retirement plan
Net actuarial gains	3	1	0
Prior service cost	0	0	(10)
Amortization of prior service cost	3	1	(1)
Amounts included in net periodic benefit cost for the period	6	2	(11)
Change in deferred income taxes	(1)	(1)	3
Change related to retirement plan, net of tax	5	1	(8)
Net change in accumulated other comprehensive income	5	1	(8)
Comprehensive income	274	148	167
Less: Net income attributable to noncontrolling interests, net of tax	43	26	40
Comprehensive income attributable to TDS shareholders	$ 231	$ 122	$ 127

XML

Consolidated Statement Of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities
Net income	$ 269	$ 147	$ 175
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion	909	932	883
Bad debts expense	77	112	101
Stock-based compensation expense	53	59	54
Deferred income taxes, net	190	34	33
Equity in earnings of unconsolidated entities	(181)	(168)	(160)
Distributions from unconsolidated entities	189	162	153
(Gain) loss on asset disposals, net	27	12	9
(Gain) loss on sale of business and other exit costs, net	0	(1)	0
(Gain) loss on license sales and exchanges, net	(5)	0	(18)
(Gain) loss on investments	(2)	0	0
Other operating activities	3	4	4
Changes in assets and liabilities from operations
Accounts receivable	(16)	(49)	(39)
Equipment installment plans receivable	(54)	(97)	(149)
Inventory	12	(19)	(5)
Accounts payable	173	(60)	2
Customer deposits and deferred revenues	4	(9)	8
Accrued taxes	(120)	(17)	(29)
Other assets and liabilities	4	(26)	(5)
Net cash provided by operating activities	1,532	1,016	1,017
Cash flows from investing activities
Cash paid for additions to property, plant and equipment	(1,338)	(957)	(776)
Cash paid for acquisitions and licenses	(172)	(346)	(16)
Cash received from investments	1	29	100
Cash paid for investments	(3)	(11)	(17)
Cash received from divestitures and exchanges	26	41	29
Advance payments for license acquisitions	(30)	(5)	(2)
Other investing activities	5	0	2
Net cash used in investing activities	(1,511)	(1,249)	(680)
Cash flows from financing activities
Issuance of long-term debt	1,250	0	0
Repayment of long-term debt	(110)	(118)	(20)
TDS Common Shares reissued for benefit plans, net of tax payments	(3)	(6)
TDS Common Shares reissued for benefit plans, net of tax payments			42
UScellular Common Shares reissued for benefit plans, net of tax payments	(11)	(9)
UScellular Common Shares reissued for benefit plans, net of tax payments			18
Repurchase of TDS Common Shares	(14)	0	0
Repurchase of UScellular Common Shares	23	21	0
Dividends paid to TDS shareholders	(78)	(75)	(72)
Payment of debt issuance costs	(41)	(1)	(2)
Distributions to noncontrolling interests	(2)	(4)	(6)
Payments to acquire additional interest in subsidiaries	(11)	0	0
Other financing activities	0	14	8
Net cash provided by (used in) financing activities	957	(220)	(32)
Net increase (decrease) in cash, cash equivalents and restricted cash	978	(453)	305
Cash, cash equivalents and restricted cash
Beginning of period	474	927	622
End of period	$ 1,452	$ 474	$ 927

XML

Consolidated Balance Sheet - USD ($) $ in Millions		Dec. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents		$ 1,429	$ 465
Short-term investments		3	0
Accounts receivable
Customers and agents, less allowances of $67 and $74, respectively		1,004	1,005
Other, less allowances of $2 and $2, respectively		108	119
Inventory, net		154	169
Prepaid expenses		105	98
Income taxes receivable		187	36
Other current assets		36	29
Total current assets		3,026	1,921
Assets held for sale		2	0
Licenses		2,638	2,480
Goodwill		547	547
Other intangible assets, net of accumulated amortization of $71 and $65, respectively	[1]	213	239
Investments in unconsolidated entities		477	488
Property, plant and equipment
In service and under construction		13,659	12,864
Less: Accumulated depreciation and amortization		9,687	9,337
Property, plant and equipment, net		3,972	3,527
Operating lease right-of-use assets		998	972
Other assets and deferred charges		652	607
Total assets	[2]	12,525	10,781
Current liabilities
Current portion of long-term debt		5	10
Accounts payable		508	374
Customer deposits and deferred revenues		193	189
Accrued interest		16	11
Accrued taxes		69	41
Accrued compensation		132	121
Short-term operating lease liabilities		129	116
Other current liabilities		101	100
Total current liabilities		1,153	962
Liabilities held for sale		1	0
Deferred liabilities and credits
Deferred income tax liability, net		863	676
Long-term operating lease liabilities		940	931
Other deferred liabilities and credits		541	481
Long-term debt, net		3,424	2,316
Commitments and contingencies
Noncontrolling interests with redemption features		10	11
TDS shareholders’ equity
Series A Common and Common Shares Authorized 290 shares (25 Series A Common and 265 Common Shares) Issued 133 shares (7 Series A Common and 126 Common Shares) Outstanding 114 shares (7 Series A Common and 107 Common Shares) and 115 shares (7 Series A Common and 108 Common Shares), respectively Par Value ($0.01 per share)		1	1
Capital in excess of par value		2,482	2,468
Treasury shares, at cost, 19 and 18 Common Shares, respectively		(477)	(479)
Accumulated other comprehensive loss		(4)	(9)
Retained earnings		2,802	2,672
Total TDS shareholders’ equity		4,804	4,653
Noncontrolling interests		789	751
Total equity		5,593	5,404
Total liabilities and equity	[2]	$ 12,525	$ 10,781

[1] The accumulated amortization balance at December 31, 2019 differs from the amount reported in the Consolidated Balance Sheet of the 2019 Form 10-K, as the previously reported amount included certain intangible assets that were fully amortized and had a net book value of zero.

[2] The consolidated total assets as of December 31, 2020 and 2019, include assets held by consolidated variable interest entities (VIEs) of $1,042 million and $915 million, respectively, which are not available to be used to settle the obligations of TDS. The consolidated total liabilities as of December 31, 2020 and 2019, include certain liabilities of consolidated VIEs of $18 million and $20 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of TDS. See Note 15 — Variable Interest Entities for additional information.

XML

Consolidated Balance Sheet (Parenthetical) - USD ($) shares in Millions, $ in Millions		Dec. 31, 2020	Dec. 31, 2019
Current assets
Customer and agent allowances		$ 67	$ 74
Other allowances		2	2
Investments
Other intangible assets accumulated amortization		$ 71	$ 65
TDS shareholders’ equity
Authorized shares (in shares)		290	290
Issued shares (in shares)		133	133
Outstanding shares (in shares)		114	115
Variable Interest Entities VIEs
Assets	[1]	$ 12,525	$ 10,781
Consolidated Variable Interest Entities
Variable Interest Entities VIEs
Assets		1,803	1,799
Liabilities		79	82
Consolidated Variable Interest Entities | Assets held
Variable Interest Entities VIEs
Assets		1,042	915
Consolidated Variable Interest Entities | Nonrecourse [Member]
Variable Interest Entities VIEs
Liabilities		$ 18	$ 20
Series A Common Shares
TDS shareholders’ equity
Authorized shares (in shares)		25	25
Issued shares (in shares)		7	7
Outstanding shares (in shares)		7	7
Par value per share (in dollars per share)		$ 0.01	$ 0.01
Common Shares
TDS shareholders’ equity
Authorized shares (in shares)		265	265
Issued shares (in shares)		126	126
Outstanding shares (in shares)		107	108
Par value per share (in dollars per share)		$ 0.01	$ 0.01
Treasury shares (in shares)		19	18

[1] The consolidated total assets as of December 31, 2020 and 2019, include assets held by consolidated variable interest entities (VIEs) of $1,042 million and $915 million, respectively, which are not available to be used to settle the obligations of TDS. The consolidated total liabilities as of December 31, 2020 and 2019, include certain liabilities of consolidated VIEs of $18 million and $20 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of TDS. See Note 15 — Variable Interest Entities for additional information.

XML

Consolidated Statement of Changes in Equity - USD ($) $ in Millions	Total	Series A Common and Common shares	Capital in excess of par value	Treasury shares	Accumulated other comprehensive income (loss)	Retained earnings	Total TDS shareholders' equity	Noncontrolling interests
Retained earnings | ASC 606	$ 195				$ (1)	$ 165	$ 164	$ 31
Beginning balance at Dec. 31, 2017	4,892	$ 1	$ 2,413	$ (669)	(1)	2,525	4,269	623
Net income attributable to TDS shareholders	135					135	135
Net income attributable to noncontrolling interests classified as equity	28						0	28
Other comprehensive income (loss)	(8)				(8)		(8)
TDS Common and Series A Common Share dividends	(72)					(72)	(72)
Dividend reinvestment plan	12		1	25		(14)	12
Incentive and compensation plans	59		17	125		(83)	59
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	55		1				1	54
Distributions to noncontrolling interests	(3)						0	(3)
Ending balance at Dec. 31, 2018	5,293	1	2,432	(519)	(10)	2,656	4,560	733
Retained earnings | ASC 842	2					2	2
Net income attributable to TDS shareholders	121					121	121
Net income attributable to noncontrolling interests classified as equity	26						0	26
Other comprehensive income (loss)	1				1		1
TDS Common and Series A Common Share dividends	(75)					(75)	(75)
Dividend reinvestment plan	15		1	20		(6)	15
Incentive and compensation plans	12		18	20		(26)	12
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	12		17				17	(5)
Distributions to noncontrolling interests	(3)						0	(3)
Ending balance at Dec. 31, 2019	5,404	1	2,468	(479)	(9)	2,672	4,653	751
Retained earnings	2,672
Retained earnings | ASC 326	(2)					(2)	(2)
Net income attributable to TDS shareholders	226					226	226
Net income attributable to noncontrolling interests classified as equity	43						0	43
Other comprehensive income (loss)	5				5		5
TDS Common and Series A Common Share dividends	(78)					(78)	(78)
Repurchase of Common Shares	(14)			(14)			(14)
Dividend reinvestment plan	3			3		0	3
Incentive and compensation plans	18		21	13		(16)	18
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	(10)		(7)				(7)	(3)
Distributions to noncontrolling interests	(2)						0	(2)
Ending balance at Dec. 31, 2020	5,593	$ 1	$ 2,482	$ (477)	$ (4)	$ 2,802	$ 4,804	$ 789
Retained earnings	$ 2,802

XML

Consolidated Statement of Changes in Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]
TDS Common and Series A Common Share dividends (in dollars per share)	$ 0.68	$ 0.66	$ 0.64

XML

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Note 1 Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Nature of Operations

Telephone and Data Systems, Inc. (TDS) is a diversified telecommunications company providing high-quality communications services to customers with 5.0 million wireless connections and 1.2 million wireline and cable connections at December 31, 2020. TDS conducts all of its wireless operations through its 82%-owned subsidiary, United States Cellular Corporation (UScellular). TDS provides wireline and cable services through its wholly-owned subsidiary, TDS Telecommunications LLC (TDS Telecom). 

TDS has the following reportable segments: UScellular, Wireline, and Cable. TDS’ non-reportable other business activities are presented as “Corporate, Eliminations and Other”, which includes the operations of TDS' wholly-owned hosted and managed services (HMS) subsidiary, which operates under the OneNeck IT Solutions brand, and its wholly-owned printing subsidiary Suttle-Straus, Inc. (Suttle-Straus). HMS' and Suttle-Straus' financial results were not significant to TDS' operations. All of TDS’ segments operate only in the United States. See Note 19 — Business Segment Information for summary financial information on each business segment.

Principles of Consolidation

The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of TDS and subsidiaries in which it has a controlling financial interest, including UScellular and TDS Telecom. In addition, the consolidated financial statements include certain entities in which TDS has a variable interest that requires consolidation under GAAP. See Note 15 — Variable Interest Entities for additional information relating to TDS’ VIEs. Intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill, indefinite-lived intangible assets and income taxes.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Cash and cash equivalents subject to contractual restrictions are classified as restricted cash. The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows.

December 31,	2020		2019
(Dollars in millions)
Cash and cash equivalents	$	1,429	$	465
Restricted cash included in Other current assets	23		9
Cash, cash equivalents and restricted cash in the statement of cash flows	$	1,452	$	474

Accounts Receivable and Allowance for Doubtful Accounts

UScellular’s accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices and accessories under installment plans, by agents and third-party distributors for sales of equipment to them and by other wireless carriers whose customers have used UScellular’s wireless systems.

TDS Telecom’s accounts receivable primarily consist of amounts owed by customers for services and products provided, by state and federal governments for grants and support funds, and by interexchange carriers for long-distance and data traffic, which TDS Telecom carries on its network.

TDS estimates expected credit losses related to accounts receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. Expected credit losses are determined for each pool of accounts receivable balances that share similar risk characteristics. The allowance for doubtful accounts is the best estimate of the amount of expected credit losses related to existing accounts receivable. TDS does not have any off-balance sheet credit exposure related to its customers.

Inventory

Inventory consists primarily of wireless devices stated at the lower of cost, which approximates cost determined on the first-in first-out basis, or net realizable value. Net realizable value is determined by reference to the stand-alone selling price.

Licenses

Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (FCC) wireless spectrum licenses that generally provide UScellular with the exclusive right to utilize designated radio spectrum within specific geographic service areas to provide wireless service. Although wireless spectrum licenses are issued for a fixed period of time, generally ten years, or in some cases twelve or fifteen years, the FCC has granted license renewals routinely and at a nominal cost. The wireless spectrum licenses held by UScellular expire at various dates. UScellular believes that it is probable that its future wireless spectrum license renewal applications will be granted. UScellular determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of the wireless spectrum licenses. Therefore, UScellular has determined that wireless spectrum licenses are indefinite-lived intangible assets.

UScellular performs its annual impairment assessment of wireless spectrum licenses as of November 1 of each year or more frequently if there are events or circumstances that cause UScellular to believe it is more likely than not that the carrying value of wireless spectrum licenses exceeds fair value. For purposes of its impairment testing, UScellular separated its FCC wireless spectrum licenses into eight units of accounting. The eight units of accounting consisted of one unit of accounting for developed operating market wireless spectrum licenses (built wireless spectrum licenses) and seven units of accounting for geographic non-operating market wireless spectrum licenses (unbuilt wireless spectrum licenses). 

UScellular performed a qualitative impairment assessment in 2020 and a quantitative impairment assessment in 2019 to determine whether the wireless spectrum licenses were impaired. Based on the impairment assessments performed, UScellular did not have an impairment of its wireless spectrum licenses in 2020 or 2019. See Note 7 — Intangible Assets for additional details related to wireless spectrum licenses.

Goodwill

TDS has Goodwill as a result of its acquisition of wireline and cable companies. TDS performs its annual impairment assessment of Goodwill as of November 1 of each year or more frequently if there are events or circumstances that cause TDS to believe it is more likely than not that the carrying value of individual reporting units exceeds their respective fair values. Goodwill impairment loss will be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

For purposes of conducting its Goodwill impairment tests, TDS Telecom identified two reporting units: Wireline and Cable. The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units for the annual impairment tests. Based on the annual impairment assessments performed, Wireline and Cable did not have an impairment of their Goodwill in 2020 or 2019. 

See Note 7 — Intangible Assets for additional details related to Goodwill.

Franchise Rights

TDS Telecom has franchise rights as a result of acquisitions of cable businesses. Franchise rights are intangible assets that provide their holder with the right to operate a business in a certain geographical location as sanctioned by the franchiser, usually a government agency. Franchise rights are generally granted for ten years and may be renewed for additional terms upon approval by the granting authority. TDS anticipates that future renewals of its franchise rights will be granted. TDS reviews franchise rights for impairment whenever events or changes in circumstances indicate that the assets might be impaired. TDS re-evaluates the useful life of franchise rights each year to determine if changes in technology or other business changes would warrant a revision of its remaining useful life. Franchise rights are included in Other intangible assets in the Consolidated Balance Sheet.

See Note 7 — Intangible Assets for additional details related to franchise rights.

Investments in Unconsolidated Entities

For its equity method investments for which financial information is readily available, TDS records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, TDS records its equity in the earnings of the entity on a one quarter lag basis.

Property, Plant and Equipment

Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets.

Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to Cost of services or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and recording it, together with proceeds, if any, and net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), as a gain or loss, as appropriate. Certain Wireline segment assets use the group depreciation method. Accordingly, when a group method asset is retired in the ordinary course of business, the original cost of the asset and accumulated depreciation in the same amount are removed, with no gain or loss recognized on the disposition.

TDS capitalizes certain costs of developing new information systems. Software licenses that qualify for capitalization as an asset are accounted for as the acquisition of an intangible asset and the incurrence of a liability to the extent that the license fees are not fully paid at acquisition.  

Depreciation and Amortization

Depreciation is provided using the straight-line method over the estimated useful life of the related asset, except for certain Wireline segment assets, which use the group depreciation method. The group depreciation method develops a depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually. TDS depreciates leasehold improvement assets over periods ranging from one year to thirty years; such periods approximate the shorter of the assets’ economic lives or the specific lease terms.

Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. There were no material changes to the assigned useful lives of the various categories of property, plant and equipment in 2020, 2019 or 2018. However, in 2020 and 2019, depreciation for certain specific assets was accelerated due to changes in technology. See Note 9 — Property, Plant and Equipment for additional details related to useful lives.

Impairment of Long-Lived Assets

TDS reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. UScellular has one asset group and TDS Telecom has two asset groups for purposes of assessing property, plant and equipment for impairment based on the integrated nature of its network, assets and operations. The cash flows generated by each of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Leases

A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. See Note 10 — Leases for additional details related to leases.

Agent Liabilities

UScellular has relationships with agents, which are independent businesses that obtain customers for UScellular. At December 31, 2020 and 2019, UScellular had accrued $55 million and $59 million, respectively, in agent related liabilities. These amounts are included in Other current liabilities in the Consolidated Balance Sheet.

Debt Issuance Costs

Debt issuance costs include underwriters’ and legal fees and other charges related to issuing and renewing various borrowing instruments and other long–term agreements, and are amortized over the respective term of each instrument. Debt issuance costs related to TDS’ and UScellular's revolving credit agreements and UScellular's receivables securitization agreement are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. All other debt issuance costs are presented as an offset to the related debt obligation in the Consolidated Balance Sheet.

Asset Retirement Obligations

TDS records asset retirement obligations for the fair value of legal obligations associated with asset retirements and a corresponding increase in the carrying amount of the related long-lived asset in the period in which the obligations are incurred. In periods subsequent to initial measurement, TDS recognizes changes in the liability resulting from the passage of time and updates to the timing or the amount of the original estimates. The liability is accreted to its estimated settlement date value over the period to the estimated settlement date. The change in the carrying amount of the long-lived asset is depreciated over the average remaining life of the related asset. See Note 11 — Asset Retirement Obligations for additional information.

Treasury Shares

Common Shares repurchased by TDS are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, TDS determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Capital in excess of par value or Retained earnings. 

Revenue Recognition

Revenues from sales of equipment and products are recognized when control has transferred to the customer, agent or third-party distributor. Service revenues are recognized as the related service is provided. See Note 2 — Revenue Recognition for additional information on TDS' policies related to Revenues.

Advertising Costs

TDS expenses advertising costs as incurred. Advertising costs totaled $213 million, $227 million and $230 million in 2020, 2019 and 2018, respectively.

Income Taxes

TDS files a consolidated federal income tax return. Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the enacted tax rates in effect when the temporary differences are expected to reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. TDS evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. Deferred taxes are reported as a net non-current asset or liability by jurisdiction. Any corresponding valuation allowance to reduce the amount of deferred tax assets is also recorded as non-current. See Note 5 — Income Taxes for additional information.

Stock-Based Compensation and Other Plans

TDS has established long-term incentive plans, dividend reinvestment plans, and a non-employee director compensation plan. The dividend reinvestment plan of TDS is not considered a compensatory plan and, therefore, recognition of compensation costs for grants made under this plan is not required. All other plans are considered compensatory plans; therefore, recognition of costs for grants made under these plans is required.

TDS recognizes stock compensation expense based upon the fair value of the specific awards granted using established valuation methodologies. The amount of stock compensation cost recognized on either a straight-line basis or graded attribution method is based on the portion of the award that is expected to vest over the requisite service period, which generally represents the vesting period. Stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. See Note 18 — Stock-Based Compensation for additional information.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments and subsequently amended the standard with additional Accounting Standards Updates, collectively referred to as ASC 326. This standard requires entities to use a new forward-looking, expected loss model to estimate credit losses and requires additional disclosures relating to the credit quality of trade and other receivables. TDS adopted the provisions of ASC 326 on January 1, 2020, using a modified retrospective method. Under this method, TDS applied the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 326 had no material impact on retained earnings.

In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the existing guidance for capitalizing implementation costs for an arrangement that has a software license. The service element of a hosting arrangement will continue to be expensed as incurred. Any capitalized implementation costs will be amortized over the period of the service contract. TDS adopted ASU 2018-15 on January 1, 2020, using the prospective method. The adoption of ASU 2018-15 did not have a significant impact on TDS' financial position or results of operations.

TDS' cloud-hosted arrangements that are service contracts consist primarily of software used to perform administrative functions. Implementation costs related to TDS' cloud-hosted arrangements, which are recorded in Prepaid expenses and Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020
(Dollars in millions)
Implementation costs, gross	$	69
Accumulated amortization	(13)
Implementation costs, net	$	56

These costs are amortized over the period of the service contract, which is generally three to five years. Amortization of implementation costs was $11 million for the year ended December 31, 2020 and was included in Selling, general and administrative expenses.

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Revenue Recognition

12 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 2 Revenue Recognition

Nature of goods and services

The following is a description of principal activities from which TDS generates its revenues.

Services and products	Nature, timing of satisfaction of performance obligations, and significant payment terms
Wireless services	Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis.
Wireless devices and accessories	UScellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. UScellular also sells wireless devices to agents and other third-party distributors for resale. UScellular frequently discounts wireless devices sold to new and current customers. UScellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to UScellular. UScellular recognizes revenue in Equipment and product sales revenues when control of the device or accessory is transferred to the customer, agent or third-party distributor, which is generally upon delivery.
Wireless roaming	UScellular receives roaming revenues when other wireless carriers’ customers use UScellular’s wireless systems. UScellular recognizes revenue in Service revenues when the roaming service is provided.
Wireless Eligible Telecommunications Carrier (ETC) Revenues	Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which UScellular is entitled to receive for such period, as determined and approved in connection with UScellular’s designation as an ETC in various states.
Wireless tower rents	UScellular receives tower rental revenues when another carrier leases tower space on a UScellular owned tower. UScellular recognizes revenue in Service revenues in the period during which the services are provided.
Wireline services	Wireline services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Wireline services are generally billed and paid in advance on a monthly basis.
Wireline wholesale revenues	Wholesale revenues include network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom’s network, special access services and state and federal support payments, including A-CAM. Wholesale revenues are recorded as the related service is provided.
Cable services	Cable services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Cable services are generally billed and paid in advance on a monthly basis.
IT hardware sales	TDS recognizes equipment revenue when it no longer has any requirements to perform, when title has passed and when the products are accepted by the customer.
Hosted and managed services	HMS Service revenues consist of cloud and hosting solutions, managed services, Enterprise Resource Planning (ERP) application management, colocation services, and IT hardware related maintenance and professional services. Revenues related to these services are recognized as services are provided.

Significant Judgments

As a practical expedient, TDS groups similar contracts or similar performance obligations together into portfolios of contracts or performance obligations if doing so does not result in a significant difference from accounting for the individual contracts discretely. TDS applies this grouping method for the following types of transactions: device activation fees, contract acquisition costs, contract fulfillment costs, and certain customer promotions. Contract portfolios are recognized over the respective expected customer lives or terms of the contracts.

Services are deemed to be highly interrelated when the method and timing of transfer and performance risk are the same. Highly interrelated services that are determined to not be distinct have been grouped into a single performance obligation. Each month of services promised is a performance obligation. The series of monthly service performance obligations promised over the course of the contract are combined into a single performance obligation for purposes of the allocation.

TDS has made judgments regarding transaction price, including but not limited to issues relating to variable consideration, time value of money, returns and non-cash consideration. When determined to be significant in the context of the contract, these items are considered in the valuation of transaction price at contract inception or modification, as appropriate.

Multiple Performance Obligations

UScellular and TDS Telecom sell bundled service and equipment offerings. In these instances, TDS recognizes its revenue based on the relative standalone selling prices for each distinct service or equipment performance obligation, or bundles thereof. TDS estimates the standalone selling price of the device or accessory to be its retail price excluding discounts. TDS estimates the standalone selling price of wireless service to be the price offered to customers on month-to-month contracts.

Incentives

Discounts, incentives, and rebates to agents and end customers that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. 

From time to time, UScellular may offer certain promotions to incentivize customers to switch to, or to purchase additional services from, UScellular. Under these types of promotions, an eligible customer may receive an incentive in the form of a discount off additional services purchased shown as a credit to the customer’s monthly bill. UScellular accounts for the future discounts as material rights at the time of the initial transaction by allocating and deferring revenue based on the relative proportion of the future discounts in comparison to the aggregate initial purchase. The deferred revenue will be recognized as service revenue in future periods. 

Amounts Collected from Customers and Remitted to Governmental Authorities

TDS records amounts collected from customers and remitted to governmental authorities on a net basis within a liability account if the amount is assessed upon the customer and TDS merely acts as an agent in collecting the amount on behalf of the imposing governmental authority. If the amount is assessed upon TDS, then amounts collected from customers are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $82 million, $78 million and $90 million for 2020, 2019 and 2018, respectively.

Disaggregation of Revenue

In the following table, TDS' revenues are disaggregated by type of service, which represents the relevant categorization of revenues for TDS' reportable segments, and timing of recognition. Service revenues are recognized over time and Equipment and product sales are point in time.

			TDS Telecom
Year Ended December 31, 2020	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,686	$	—	$	—	$	—	$	—	$	2,686
Inbound roaming	152		—		—		—		—		152
Residential	—		349		245		594		—		594
Commercial	—		152		46		198		—		198
Wholesale	—		181		—		181		—		181
Other service	152		—		—		(1)		69		220
Service revenues from contracts with customers	2,990		683		290		972		69		4,031
Equipment and product sales	970		1		—		1		118		1,089
Total revenues from contracts with customers2	$	3,960	$	683	$	290	$	973	$	187	$	5,120

			TDS Telecom
Year Ended December 31, 2019	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,650	$	—	$	—	$	—	$	—	$	2,650
Inbound roaming	174		—		—		—		—		174
Residential	—		328		205		533		—		533
Commercial	—		168		41		209		—		209
Wholesale	—		185		—		185		—		185
Other service	137		—		—		(1)		72		208
Service revenues from contracts with customers	2,961		681		246		926		72		3,959
Equipment and product sales	987		1		—		1		129		1,117
Total revenues from contracts with customers2	$	3,948	$	682	$	246	$	927	$	201	$	5,076

			TDS Telecom
Year Ended December 31, 2018	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,623	$	—	$	—	$	—	$	—	$	2,623
Inbound roaming	154		—		—		—		—		154
Residential	—		321		188		509		—		509
Commercial	—		184		42		226		—		226
Wholesale	—		191		—		191		—		191
Other service	135		—		—		(1)		72		206
Service revenues from contracts with customers	2,912		696		230		925		72		3,909
Equipment and product sales	989		2		—		2		119		1,110
Total revenues from contracts with customers2	$	3,901	$	698	$	230	$	927	$	191	$	5,019

Numbers may not foot due to rounding.

1TDS Telecom Total includes eliminations between the Wireline and Cable segments.

2Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.

Contract Balances

For contracts that involve multiple element service and equipment offerings, the transaction price is allocated to each performance obligation based on its relative standalone selling price. When payment is collected in advance of delivery of goods or services, a contract liability is recorded. A contract asset is recorded when revenue is recognized in advance of TDS’ right to receive consideration. Once there is an unconditional right to receive the consideration, TDS bills the customer under the terms of the respective contract and the amounts are recorded as receivables.

TDS recognizes Equipment and product sales revenue when the equipment is delivered to the customer and a corresponding contract asset or liability is recorded for the difference between the amount of revenue recognized and the amount billed to the customer in cases where discounts are offered. The contract asset or liability is reduced over the contract term as service is provided and billed to the customer.

The following table provides balances for contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet, and contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.

December 31,	2020		2019
(Dollars in millions)
Contract assets	$	13	$	10
Contract liabilities	$	216	$	197

Revenue recognized related to contract liabilities existing at January 1, 2020 was $172 million for the year ended December 31, 2020.

Transaction price allocated to the remaining performance obligations

The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of December 31, 2020, and may vary from actual results. As practical expedients, revenue related to contracts of less than one year, generally month-to-month contracts, and contracts with a fixed per-unit price and variable quantity, are excluded from these estimates.

	Service Revenues
(Dollars in millions)
2021	$	377
2022	160
Thereafter	158
Total	$	695

Contract Cost Assets

TDS expects that commission fees paid as a result of obtaining contracts are recoverable and therefore TDS defers and amortizes these costs. As a practical expedient, costs with an amortization period of one year or less are expensed as incurred. TDS also incurs fulfillment costs, such as installation costs, where there is an expectation that a future benefit will be realized. Deferred commission fees and fulfillment costs are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term. Contract cost asset balances, which are recorded in Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020		2019
(Dollars in millions)
Costs to obtain contracts
Sales commissions	$	139	$	146
Fulfillment costs
Installation costs	10		11
Total contract cost assets	$	149	$	157

Amortization of contract cost assets was $120 million, $126 million and $124 million for the years ended December 31, 2020, 2019 and 2018, respectively, and was included in Selling, general and administrative expenses and Cost of services expenses.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3 Fair Value Measurements

As of December 31, 2020 and 2019, TDS did not have any material financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP.

The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets.

TDS has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.

	Level within the Fair Value Hierarchy	December 31, 2020				December 31, 2019
		Book Value		Fair Value		Book Value		Fair Value
(Dollars in millions)
Cash and cash equivalents	1	$	1,429	$	1,429	$	465	$	465
Short-term investments	1	3		3		—		—
Long-term debt
Retail	2	2,753		2,809		1,753		1,796
Institutional	2	535		707		534		594
Other	2	230		230		84		84

The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes lease obligations, other installment arrangements, the current portion of Long-term debt and debt financing costs. The fair value of “Retail” Long-term debt was estimated using market prices for TDS’ 7.0% Senior Notes, 6.875% Senior Notes, 6.625% Senior Notes and 5.875% Senior Notes, and UScellular’s 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes, 6.95% Senior Notes, 6.25% Senior Notes issued in August 2020 and 5.5% Senior Notes issued in December 2020. TDS’ “Institutional” debt consists of UScellular’s 6.7% Senior Notes which are traded over the counter. TDS’ “Other” debt consists of senior term loan credit agreements and receivables securitization agreement. TDS estimated the fair value of its Institutional and Other debt through a discounted cash flow analysis using the interest rates or estimated yield to maturity for each borrowing, which ranged from 1.35% to 3.75% and 3.55% to 6.25% at December 31, 2020 and 2019, respectively.

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Equipment Installment Plans

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Equipment Installment Plans

Note 4 Equipment Installment Plans

UScellular sells devices to customers under equipment installment plans over a specified time period. For certain equipment installment plans, after a specified period of time or amount of payments, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract.

The following table summarizes equipment installment plan receivables as of December 31, 2020 and 2019.

December 31,	2020		2019
(Dollars in millions)
Equipment installment plan receivables, gross	$	1,007	$	1,008
Allowance for credit losses	(78)		(84)
Equipment installment plan receivables, net	$	929	$	924
Net balance presented in the Consolidated Balance Sheet as:
Accounts receivable — Customers and agents (Current portion)	$	590	$	587
Other assets and deferred charges (Non-current portion)	339		337
Equipment installment plan receivables, net	$	929	$	924

UScellular uses various inputs, including internal data, information from credit bureaus and other sources, to evaluate the credit profiles of its customers. From this evaluation, a credit class is assigned to the customer that determines the number of eligible lines, the amount of credit available, and the down payment requirement, if any. These credit classes are grouped into four credit categories: lowest risk, lower risk, slight risk and higher risk. A customer's assigned credit class is reviewed periodically and a change is made, if appropriate. An equipment installment plan billed amount is considered past due if not paid within 30 days. The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:

	December 31, 2020										December 31, 2019
	Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total		Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total
(Dollars in millions)
Unbilled	$	819	$	98	$	22	$	9	$	948	$	812	$	99	$	23	$	8	$	942
Billed — current	36		5		1		1		43		37		5		2		1		45
Billed — past due	8		5		2		1		16		11		6		3		1		21
Total	$	863	$	108	$	25	$	11	$	1,007	$	860	$	110	$	28	$	10	$	1,008

The balance of the equipment installment plan receivables as of December 31, 2020 on a gross basis by year of origination were as follows:

	2018		2019		2020		Total
(Dollars in millions)
Lowest Risk	$	42	$	270	$	551	$	863
Lower Risk	3		28		77		108
Slight Risk	1		6		18		25
Higher Risk	—		2		9		11
Total	$	46	$	306	$	655	$	1,007

 

Activity for the years ended December 31, 2020 and December 31, 2019, in the allowance for credit losses for equipment installment plan receivables was as follows:

	2020		2019
(Dollars in millions)
Allowance for credit losses, beginning of year	$	84	$	77
Bad debts expense	50		82
Write-offs, net of recoveries	(56)		(75)
Allowance for credit losses, end of year	$	78	$	84

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Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 5 Income Taxes

TDS’ current income taxes balances at December 31, 2020 and 2019, were as follows:

December 31,	2020		2019
(Dollars in millions)
Federal income taxes receivable	$	180	$	31
Net state income taxes receivable	7		5

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Current
Federal	$	(175)	$	15	$	10
State	4		15		3
Deferred
Federal	179		36		24
State	11		(2)		9
Total income tax expense (benefit)	$	19	$	64	$	46

A reconciliation of TDS’ income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax rate to TDS’ effective income tax rate is as follows:

Year Ended December 31,	2020				2019				2018
	Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate	$	60	21.0	%	$	44	21.0	%	$	46	21.0	%
State income taxes, net of federal benefit1	11		4.0		12		5.5		11		4.9
Federal income tax rate change2	—		—		—		—		(16)		(7.1)
Change in federal valuation allowance3	—		—		7		3.1		(1)		(0.3)
Loss carryback benefit of CARES Act4	(60)		(21.0)		—		—		—		—
Nondeductible compensation	9		3.0		4		1.9		9		4.1
Tax credits	(2)		(0.6)		(4)		(1.9)		(1)		(0.6)
Other differences, net	1		—		1		0.7		(2)		(1.0)
Total income tax expense (benefit) and rate	$	19	6.4	%	$	64	30.3	%	$	46	21.0	%

1State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to state valuation allowances. 

2The Tax Act reduced the federal income tax rate from 35% to 21% for years after 2017, resulting in a tax benefit in 2018 due primarily to an income tax accounting method change that accelerated tax depreciation on certain assets for the 2017 tax year, pursuant to FASB Accounting Standards Update 2018-05, Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

3Change in federal valuation allowance in 2019 is due primarily to interest expense carryforwards not expected to be realized. The 2018 change also includes interest expense carryforwards not expected to be realized, offset by a change in judgment related to net operating loss carryforwards that became realizable due to an internal restructuring.

4The CARES Act provides a 5-year carryback of net operating losses generated in years 2018-2020. As the statutory federal tax rate applicable to certain years within the carryback period is 35%, carryback to those years provides a tax benefit in excess of the current federal statutory rate of 21%.

Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:

December 31,	2020		2019
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards	$	183	$	168
Lease liabilities	257		251
Asset retirement obligation	81		74
Other	109		106
Total deferred tax assets	630		599
Less valuation allowance	(158)		(152)
Net deferred tax assets	472		447
Deferred tax liabilities
Property, plant and equipment	652		481
Licenses/intangibles	287		261
Partnership investments	144		132
Lease assets	235		226
Other	17		22
Total deferred tax liabilities	1,335		1,122
Net deferred income tax liability	$	863	$	675

At December 31, 2020, TDS and certain subsidiaries had $3,088 million of state NOL carryforwards (generating a $166 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2021 and 2040. TDS and certain subsidiaries had $80 million of federal NOL carryforwards (generating a $17 million deferred tax asset) available to offset future taxable income. The federal NOL carryforwards generally expire between 2021 and 2038, with the exception of federal NOLs generated after 2017, which do not expire. A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized. 

A summary of TDS' deferred tax asset valuation allowance is as follows:

	2020		2019		2018
(Dollars in millions)
Balance at beginning of year	$	152	$	135	$	147
Charged to Income tax expense	6		17		(5)
Charged to Retained earnings	—		—		(7)
Balance at end of year	$	158	$	152	$	135

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2020		2019		2018
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year	$	49	$	49	$	46
Additions for tax positions of current year	8		8		8
Additions for tax positions of prior years	3		—		2
Reductions for tax positions of prior years	(1)		(7)		(1)
Reductions for settlements of tax positions	—		(1)		—
Reductions for lapses in statutes of limitations	(5)		—		(6)
Unrecognized tax benefits balance at end of year	$	54	$	49	$	49

Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax expense in 2020, 2019 and 2018 by $43 million, $39 million and $39 million, respectively, net of the federal benefit from state income taxes. 

TDS recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense (benefit). The amounts charged to income tax expense related to interest and penalties resulted in an expense of $2 million, $3 million and less than $1 million in 2020, 2019 and 2018, respectively. Net accrued liabilities for interest and penalties were $23 million and $21 million at December 31, 2020 and 2019, respectively, and are included in Other deferred liabilities and credits in the Consolidated Balance Sheet.

TDS and its subsidiaries file federal and state income tax returns. With limited exceptions, TDS is no longer subject to federal and state income tax audits for the years prior to 2017.

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Earnings Per Share

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Note 6 Earnings Per Share

Basic earnings per share attributable to TDS shareholders is computed by dividing Net income attributable to TDS shareholders by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share attributable to TDS shareholders is computed by dividing Net income attributable to TDS shareholders by the weighted average number of Common Shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon the exercise of outstanding stock options and the vesting of performance and restricted stock units.

The amounts used in computing basic and diluted earnings per share attributable to TDS shareholders were as follows:

Year Ended December 31,	2020		2019		2018
(Dollars and shares in millions, except per share amounts)
Net income attributable to TDS shareholders used in basic earnings per share	$	226	$	121	$	135
Adjustments to compute diluted earnings:
Noncontrolling interest adjustment	(3)		(1)		(2)
Net income attributable to TDS shareholders used in diluted earnings per share	$	223	$	120	$	133
Weighted average number of shares used in basic earnings per share:
Common Shares	107		107		105
Series A Common Shares	7		7		7
Total	114		114		112
Effects of dilutive securities	1		2		2
Weighted average number of shares used in diluted earnings per share	115		116		114
Basic earnings per share attributable to TDS shareholders	$	1.97	$	1.06	$	1.20
Diluted earnings per share attributable to TDS shareholders	$	1.93	$	1.03	$	1.17

Certain Common Shares issuable upon the exercise of stock options or vesting of performance and restricted stock units were not included in weighted average diluted shares outstanding for the calculation of Diluted earnings per share attributable to TDS shareholders because their effects were antidilutive. The number of such Common Shares excluded was 5 million shares, 2 million shares and 3 million shares for 2020, 2019 and 2018, respectively.

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Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 7 Intangible Assets

Licenses

TDS reviews attractive opportunities to acquire additional wireless spectrum, including pursuant to FCC auctions. TDS also may seek to divest outright or include in exchanges wireless spectrum that is not strategic to its long-term success. Prior to 2009, TDS accounted for UScellular’s share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS’ Licenses. Consequently, UScellular's Licenses on a stand-alone basis do not equal the TDS consolidated Licenses related to UScellular. Activity related to TDS' Licenses is presented below.

	UScellular		Wireline		Cable		Total
(Dollars in millions)
Balance at December 31, 2018	$	2,190	$	2	$	3	$	2,195
Acquisitions	267		—		—		267
Divestitures	(10)		—		—		(10)
Exchanges - Licenses received	26		—		—		26
Capitalized interest	2		—		—		2
Balance at December 31, 2019	2,475		2		3		2,480
Acquisitions	171		—		—		171
Divestitures	(18)		—		—		(18)
Capitalized interest	5		—		—		5
Balance at December 31, 2020	$	2,633	$	2	$	3	$	2,638

Auction 103

In March 2020, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 237 wireless spectrum licenses in the 37, 39 and 47 GHz bands (Auction 103) for $146 million. In June 2020, the wireless spectrum licenses from Auction 103 were granted by the FCC.

Goodwill

Activity related to TDS' Goodwill is presented below.

	Wireline1		Cable		Total
(Dollars in millions)
Balance at December 31, 2018	$	409	$	100	$	509
Acquisitions	—		38		38
Balance at December 31, 2019	409		138		547
Acquisitions	—		—		—
Balance at December 31, 2020	$	409	$	138	$	547

1Accumulated impairment losses in prior periods were $29 million for Wireline.

Other intangible assets

Activity related to TDS' Other intangible assets is presented below.

	December 31, 2020						December 31, 2019
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
(Dollars in millions)
Franchise rights	$	255	$	(51)	$	204	$	255	$	(34)	$	221
Customer lists and Trade name1	29		(20)		9		49		(31)		18
Total	$	284	$	(71)	$	213	$	304	$	(65)	$	239

1The Customer lists and Trade name balances at December 31, 2019 differ from the amounts reported in Note 8 – Intangible Assets of the 2019 Form 10-K, as the previously reported amounts included certain intangible assets that were fully amortized and had a net book value of zero.

Amortization expense for intangible assets was $26 million, $24 million and $26 million for the years ended December 31, 2020, 2019 and 2018, respectively. Based on the current balance of finite-lived intangible assets, the estimated amortization expense is $21 million, $20 million, $19 million, $17 million and $17 million for the years 2021 through 2025, respectively.

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Investments In Unconsolidated Entities

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Entities

Note 8 Investments in Unconsolidated Entities

Investments in unconsolidated entities consist of amounts invested in entities in which TDS holds a noncontrolling interest. TDS' Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.

December 31,	2020		2019
(Dollars in millions)
Equity method investments:
Capital contributions, loans, advances and adjustments	$	115	$	116
Cumulative share of income	2,278		2,099
Cumulative share of distributions	(1,937)		(1,748)
Total equity method investments	456		467
Measurement alternative method investments	21		21
Total investments in unconsolidated entities	$	477	$	488

The following tables, which are based on unaudited information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of TDS’ equity method investments:

December 31,	2020		2019
(Dollars in millions)
Assets
Current	$	1,232	$	1,516
Noncurrent	5,908		5,776
Total assets	$	7,140	$	7,292
Liabilities and Equity
Current liabilities	$	646	$	626
Noncurrent liabilities	1,124		1,132
Partners’ capital and shareholders’ equity	5,370		5,534
Total liabilities and equity	$	7,140	$	7,292

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Results of Operations
Revenues	$	6,702	$	6,929	$	6,801
Operating expenses	4,753		5,043		4,985
Operating income	1,949		1,886		1,816
Other income (expense), net	13		(24)		9
Net income	$	1,962	$	1,862	$	1,825

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note 9 Property, Plant and Equipment

TDS’ Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2020 and 2019, were as follows:

December 31,	Useful Lives (Years)	2020		2019
(Dollars in millions)
Land	N/A	$	56	$	57
Buildings	5-40	533		527
Leasehold and land improvements	1-30	1,404		1,314
Cable and wire	15-40	2,195		1,996
Network and switching equipment	3-10	2,634		2,507
Cell site equipment	7-25	4,017		3,708
Office furniture and equipment	3-10	394		387
Other operating assets and equipment	1-12	189		174
System development	1-7	1,709		1,604
Work in process	N/A	528		590
Total property, plant and equipment, gross		13,659		12,864
Accumulated depreciation and amortization		(9,687)		(9,337)
Total property, plant and equipment, net		$	3,972	$	3,527

Depreciation and amortization expense totaled $862 million, $890 million and $839 million in 2020, 2019 and 2018, respectively. In 2020, 2019 and 2018, (Gain) loss on asset disposals, net included charges of $27 million, $12 million and $9 million, respectively, related to disposals of assets, trade-ins of older assets for replacement assets and other retirements of assets from service in the normal course of business.

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Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Note 10 Leases

Change in Accounting Policy

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases and subsequently amended the standard with several Accounting Standards Updates, collectively referred to as ASC 842. This standard replaces the previous lease accounting standard under ASC 840 - Leases and requires lessees to record a right-of-use (ROU) asset and lease liability for the majority of leases. TDS adopted the provisions of ASC 842 on January 1, 2019, using a modified retrospective method. Under this method, TDS elected to apply the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 842 had no material impact on retained earnings.

Lessee Agreements

A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of TDS’ leases are classified as operating leases, although it does have a small number of finance leases. TDS’ most significant leases are for land and tower spaces, network facilities, retail spaces, and offices.

TDS has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, TDS uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on TDS' unsecured rates, adjusted to approximate the rates at which TDS would be required to borrow on a collateralized basis over a term similar to the recognized lease term. TDS applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. The cost of nonlease components in TDS’ lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price.

Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. TDS’ variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities.

The identified lease term determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of TDS’ leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when TDS is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless TDS is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, TDS has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes.

The following table shows the components of lease cost included in the Consolidated Statement of Operations:

Year Ended December 31,	2020		2019
(Dollars in millions)
Operating lease cost	$	184	$	177
Financing lease cost:
Amortization of ROU assets	2		2
Interest on lease liabilities	1		1
Variable lease cost	11		8
Total lease cost	$	198	$	188

The following table shows supplemental cash flow information related to lease activities:

Year Ended December 31,	2020		2019
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	188	$	172
Operating cash flows from finance leases	1		1
ROU assets obtained in exchange for lease obligations:
Operating leases	$	157	$	132
Finance leases	—		10

The following table shows the classification of TDS’ finance leases in its Consolidated Balance Sheet:

December 31,	2020		2019
(Dollars in millions)
Finance Leases
Property, plant and equipment	$	20	$	20
Less: Accumulated depreciation and amortization	7		5
Property, plant and equipment, net	$	13	$	15
Current portion of long-term debt	—		1
Long-term debt, net	$	7	$	7
Total finance lease liabilities	$	7	$	8

The table below shows a weighted-average analysis for lease terms and discount rates for all leases:

December 31,	2020		2019
Weighted Average Remaining Lease Term
Operating leases	12 years		12 years
Finance leases	25 years		24 years
Weighted Average Discount Rate
Operating leases	4.1	%	4.4	%
Finance leases	6.2	%	6.3	%

The maturities of lease liabilities are as follows:

	Operating Leases		Finance Leases
(Dollars in millions)
2021	$	169	$	—
2022	168		1
2023	151		1
2024	132		1
2025	100		—
Thereafter	708		15
Total lease payments1	$	1,428	$	18
Less: Imputed interest	359		11
Present value of lease liabilities	$	1,069	$	7

1    Lease payments exclude $54 million of legally binding lease payments for leases signed but not yet commenced.

Lessor Agreements

TDS’ most significant lessor leases are for tower space and colocation space. All of TDS’ lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. TDS’ lessor agreements with lease and nonlease components are generally accounted for separately; however, certain service agreements with insignificant lease components are accounted for as nonlease transactions.

The identified lease term determines the periods to which revenue is allocated over the term of the lease. Many of TDS’ leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when TDS is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise.

Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. TDS’ variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income.

The following table shows the components of lease income which are included in Service revenues in the Consolidated Statement of Operations:

Year Ended December 31,	2020		2019
(Dollars in millions)
Operating lease income1	$	105	$	100

1During the third quarter of 2019, TDS recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the year ended December 31, 2019. TDS determined that this adjustment was not material to any of the periods impacted.

The maturities of expected lease payments to be received are as follows:

	Operating Leases
(Dollars in millions)
2021	$	93
2022	77
2023	51
2024	35
2025	16
Thereafter	19
Total future lease maturities	$	291

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Asset Retirement Obligation

12 Months Ended

Dec. 31, 2020

Asset Retirement Obligation [Abstract]

Asset Retirement Obligation

Note 11 Asset Retirement Obligations

UScellular is subject to asset retirement obligations associated with its leased cell sites, switching office sites, retail store sites and office locations. Asset retirement obligations generally include obligations to restore leased land, towers, retail store and office premises to their pre-lease conditions.

TDS Telecom owns poles, cable and wire and certain buildings and also leases office space and property used for housing central office switching equipment and fiber cable. These assets and leases often have removal or remediation requirements associated with them. For example, TDS Telecom’s poles, cable and wire are often located on property that is not owned by TDS Telecom and may be subject to the provisions of easements, permits, or leasing arrangements. Pursuant to the terms of the permits, easements, or leasing arrangements, TDS Telecom is often required to remove these assets and return the property to its original condition at a future date.

Asset retirement obligations are included in Other deferred liabilities and credits in the Consolidated Balance Sheet. 

In 2020 and 2019, UScellular and TDS Telecom performed a review of the assumptions and estimated costs related to asset retirement obligations. The results of the reviews (identified as Revisions in estimated cash outflows) and other changes in asset retirement obligations during 2020 and 2019, were as follows:

	2020		2019
(Dollars in millions)
Balance at beginning of year	$	342	$	307
Additional liabilities accrued	5		13
Revisions in estimated cash outflows	11		2
Acquisition of assets	—		1
Disposition of assets	(1)		(1)
Accretion expense	20		20
Balance at end of year	$	377	$	342

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Debt

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Debt

Note 12 Debt

Revolving Credit Agreements

At December 31, 2020, TDS and UScellular had revolving credit agreements available for general corporate purposes. Amounts under the revolving credit agreements may be borrowed, repaid and reborrowed from time to time until maturity in March 2025. Interest expense representing commitment fees on the unused portion of the revolving lines of credit was $2 million in each of 2020, 2019 and 2018. The commitment fees are based on the unsecured senior debt ratings assigned to TDS and UScellular by certain ratings agencies.

The following table summarizes the revolving credit agreements as of December 31, 2020:

	TDS		UScellular
(Dollars in millions)
Maximum borrowing capacity	$	400	$	300
Letters of credit outstanding	$	1	$	2
Amount borrowed	$	—	$	—
Amount available for use	$	399	$	298

Borrowings under the revolving credit agreements bear interest either at a London Inter-bank Offered Rate (LIBOR) plus 1.50% or at an alternative Base Rate as defined in the revolving credit agreement plus 0.50%, at TDS’ or UScellular’s option. TDS and UScellular may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by TDS or UScellular and approved by the lenders). TDS’ and UScellular’s credit spread and commitment fees on their revolving credit agreements may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. 

In connection with UScellular’s revolving credit agreement, TDS and UScellular entered into a subordination agreement together with the administrative agent for the lenders under UScellular’s revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from UScellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from UScellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105 million and (ii) refinancing indebtedness in excess of $250 million will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under UScellular’s revolving credit agreement. As of December 31, 2020, UScellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement.

The continued availability of the revolving credit agreements requires TDS and UScellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing.

The revolving credit agreements include the following financial covenants:

▪Consolidated Interest Coverage Ratio may not be less than 3.00 to 1.00 as of the end of any fiscal quarter.

▪Consolidated Leverage Ratio may not be greater than 3.25 to 1.00 as of the end of any fiscal quarter.

Certain TDS and UScellular wholly-owned subsidiaries have jointly and severally unconditionally guaranteed the payment and performance of the obligations of TDS and UScellular under the revolving credit agreements. Other subsidiaries that meet certain criteria will be required to provide a similar guaranty in the future. TDS and UScellular believe that they were in compliance with all of the financial and other covenants and requirements set forth in their revolving credit agreements as of December 31, 2020.

Term Loan Agreements

At December 31, 2020, TDS and UScellular had senior term loan credit agreements available for general corporate purposes. The term loans may be drawn in one or more advances by the one-year anniversary of the date of the agreement, which is January 6, 2021 for TDS and June 11, 2021 for UScellular; amounts not drawn by that time will cease to be available.

The following table summarizes the term loan credit agreements as of December 31, 2020:

	TDS		UScellular
(Dollars in millions)
Maximum borrowing capacity	$	200	$	300
Amount borrowed	$	125	$	83
Amount available for use	$	75	$	217

Borrowings under the TDS term loan bear interest at a rate of LIBOR plus 2.0%. Principal reductions are due and payable in quarterly installments of $0.5 million beginning in June 2021. The remaining unpaid balance will be due and payable in January 2027. In January 2021, TDS borrowed $75 million under the senior term loan credit agreement.

Borrowings under the UScellular term loan bear interest at a rate of LIBOR plus 2.25%. Principal reductions are due and payable in quarterly installments of $0.75 million beginning in September 2021. The remaining unpaid balance will be due and payable in June 2027. In connection with UScellular’s term loan credit agreement, TDS and UScellular entered into a subordination agreement together with the administrative agent for the lenders under UScellular’s term loan credit agreement, which is substantially the same as the subordination agreement for UScellular as described above under the “Revolving Credit Agreements.” As of December 31, 2020, UScellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan agreement pursuant to this subordination agreement.

The senior term loan credit agreements contain financial covenants and subsidiary guarantees that are consistent with the revolving credit agreements described above. TDS and UScellular believe that they were in compliance with all of the financial and other covenants and requirements set forth in their term loan credit agreements as of December 31, 2020.

Receivables Securitization Agreement

At December 31, 2020, UScellular had a receivables securitization agreement for securitized borrowings using its equipment installment receivables for general corporate purposes. Amounts under the receivables securitization agreement may be borrowed, repaid and reborrowed from time to time until maturity in December 2022, which may be extended from time to time as specified therein. The outstanding borrowings bear interest at floating rates. In April 2020, UScellular borrowed $125 million under its receivables securitization agreement. In October 2020, UScellular amended and restated its agreement to increase its total borrowing capacity to $300 million. In December 2020, UScellular repaid $100 million of the outstanding borrowing. As of December 31, 2020, the outstanding borrowings under the agreement were $25 million and the unused capacity was $275 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement. As of December 31, 2020, the USCC Master Note Trust held $205 million of assets available to be pledged as collateral for the receivables securitization agreement. Interest expense representing commitment fees on the unused portion of the agreement was $1 million in each of 2020, 2019 and 2018.

In connection with entering into the receivables securitization agreement in 2017, UScellular formed a wholly-owned subsidiary, USCC Master Note Trust (Trust), which qualifies as a bankruptcy remote entity. Under the terms of the agreement, UScellular, through its subsidiaries, transfers eligible equipment installment receivables to the Trust. The Trust then utilizes the transferred assets as collateral for notes payables issued to third party financial institutions. Since UScellular retains effective control of the transferred assets in the Trust, any activity associated with this receivables securitization agreement will be treated as a secured borrowing. Therefore, TDS will continue to report equipment installment receivables and any related balances on the Consolidated Balance Sheet. Cash received from borrowings under the receivables securitization agreement will be reported as Debt. Refer to Note 15 — Variable Interest Entities for additional information.

UScellular entered into a performance guaranty whereby UScellular guarantees the performance of certain wholly-owned subsidiaries of UScellular under the receivables securitization agreement. 

The continued availability of the receivables securitization agreement requires UScellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and provide representations on certain matters at the time of each borrowing. The covenants include the same financial covenants for UScellular as described above under the “Revolving Credit Agreements.” TDS believes that UScellular was in compliance as of December 31, 2020, with all of the financial covenants and requirements set forth in its receivables securitization agreement.

Other Long-Term Debt

In August 2020, UScellular issued $500 million of 6.25% Senior Notes due 2069, and received cash proceeds of $483 million after payment of debt issuance costs of $17 million. These funds will be used for general corporate purposes.

In December 2020, UScellular issued $500 million of 5.5% Senior Notes due 2070, and received cash proceeds of $483 million after payment of debt issuance costs of $17 million. These funds will be used for general corporate purposes.

Long-term debt as of December 31, 2020 and 2019, was as follows:

				December 31, 2020						December 31, 2019
	Issuance date	Maturity date	Call date (any time on or after)	Principal Amount		Less Unamortized discounts and debt issuance costs		Total		Principal Amount		Less Unamortized discount and debt issuance costs		Total
(Dollars in millions)
TDS Unsecured Senior Notes
6.625%	Mar 2005	Mar 2045	Mar 2010	$	116	$	3	$	113	$	116	$	3	$	113
6.875%	Nov 2010	Nov 2059	Nov 2015	225		7		218		225		7		218
7.000%	Mar 2011	Mar 2060	Mar 2016	300		9		291		300		9		291
5.875%	Dec 2012	Dec 2061	Dec 2017	195		7		188		195		7		188
UScellular Unsecured Senior Notes
6.700%	Dec 2003 and June 2004	Dec 2033	Dec 2003 and June 2004	$	544	$	13	$	531	$	544	$	13	$	531
6.950%	May 2011	May 2060	May 2016	342		11		331		342		11		331
7.250%	Dec 2014	Dec 2063	Dec 2019	275		10		265		275		10		265
7.250%	Nov 2015	Dec 2064	Dec 2020	300		10		290		300		10		290
6.250%	Aug 2020	Sep 2069	Sep 2025	500		17		483		—		—		—
5.500%	Dec 2020	Mar 2070	Mar 2026	500		17		483		—		—		—
UScellular Term Loan				83		3		80		83		1		82
TDS Term Loan				125		2		123		—		—		—
EIP Securitization				25		—		25		—		—		—
Finance lease obligations				7		—		7		8		—		8
Installment payment agreement				—		—		—		8		1		7
Other long-term notes				1		—		1		2		—		2
Total long-term debt				$	3,538	$	109	$	3,429	$	2,398	$	72	$	2,326
Long-term debt, current								$	5					$	10
Long-term debt, noncurrent								$	3,424					$	2,316

TDS may redeem its callable notes and UScellular may redeem its 6.95% Senior Notes, 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes, 6.25% Senior Notes and 5.5% Senior Notes, in whole or in part at any time after the respective call date, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest. UScellular may redeem the 6.7% Senior Notes, in whole or in part, at any time prior to maturity at a redemption price equal to the greater of (a) 100% of the principal amount of such notes, plus accrued and unpaid interest, or (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 30 basis points.

Interest on the Senior Notes outstanding at December 31, 2020, is payable quarterly, with the exception of UScellular's 6.7% Senior Notes for which interest is payable semi-annually. 

The annual requirements for principal payments on long-term debt are approximately $5 million, $30 million, $5 million, $5 million and $5 million for the years 2021 through 2025, respectively.

The covenants associated with TDS and its subsidiaries’ long-term debt obligations, among other things, restrict TDS’ ability, subject to certain exclusions, to incur additional liens, enter into sale and leaseback transactions, and sell, consolidate or merge assets.

TDS’ and UScellular’s long-term debt notes do not contain any provisions resulting in acceleration of the maturities of outstanding debt in the event of a change in TDS’ or UScellular’s credit rating.

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Employee Benefits Plans

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans

Note 13 Employee Benefit Plans

Defined Contribution Plans

TDS sponsors a qualified noncontributory defined contribution pension plan. The plan provides benefits for certain employees of TDS Corporate, TDS Telecom and UScellular. Under this plan, pension costs are calculated separately for each participant and are funded annually. Total pension costs were $16 million in 2020, $17 million in 2019 and $16 million in 2018. In addition, TDS sponsors a defined contribution retirement savings plan (401(k) plan). Total costs incurred from TDS’ contributions to the 401(k) plan were $27 million in 2020, $25 million in 2019 and $28 million in 2018.

TDS also sponsors an unfunded nonqualified deferred supplemental executive retirement plan for certain employees to offset the reduction of benefits caused by the limitation on annual employee compensation under the tax laws.

Other Post-Retirement Benefits

TDS sponsors a defined benefit post-retirement plan that provides medical benefits to retirees and that covers certain employees of TDS Corporate and TDS Telecom, which is not significant to TDS’ financial position or operating results. The plan is contributory, with retiree contributions adjusted annually. TDS recognizes the funded status of the plan as a component of Other assets and deferred charges in the Consolidated Balance Sheet as of December 31, 2020 and 2019. Changes in the funded status are included in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheet before affecting such amounts for income taxes to the extent that such changes are not recognized in earnings as a component of net periodic benefit cost. 

The post-retirement benefit fund invests mainly in mutual funds that hold U.S. equities, international equities, and debt securities. The post-retirement benefit fund does not hold any debt or equity securities issued by TDS, UScellular or any related parties. The fair value of the plan assets of the post-retirement benefit fund was $69 million and $63 million as of December 31, 2020 and 2019, respectively. The total plan benefit obligations were $57 million and $55 million as of December 31, 2020 and 2019, respectively. Therefore, the total funded status was an asset of $12 million and $8 million as of December 31, 2020 and 2019, respectively.

TDS is not required to set aside current funds for its future retiree health insurance benefits. The decision to contribute to the plan assets is based upon several factors, including the funded status of the plan, market conditions, alternative investment opportunities, tax benefits and other circumstances. In accordance with applicable income tax regulations, annual contributions to fund the costs of future retiree medical benefits may not exceed certain thresholds. TDS has not determined whether it will make a contribution to the plan in 2021.

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 14 Commitments and Contingencies

Indemnifications

TDS enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require TDS to perform under these indemnities are transaction specific; however, these agreements may require TDS to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. TDS is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, TDS has not made any significant indemnification payments under such agreements.

Legal Proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.

TDS accrued less than $1 million and $2 million with respect to legal proceedings and unasserted claims as of December 31, 2020 and 2019, respectively. TDS is unable to estimate any contingent loss in excess of the amounts accrued.

In April 2018, the United States Department of Justice (DOJ) notified TDS that it was conducting inquiries of UScellular and TDS under the federal False Claims Act relating to UScellular’s participation in wireless spectrum license auctions 58, 66, 73 and 97 conducted by the FCC. UScellular is/was a limited partner in several limited partnerships which qualified for the 25% bid credit in each auction. The investigation arose from civil actions under the Federal False Claims Act brought by private parties in the U.S. District Court for the Western District of Oklahoma. In November and December 2019, following the DOJ’s investigation, the DOJ informed TDS and UScellular that it would not intervene in the above-referenced actions. Subsequently, the private party plaintiffs filed amended complaints in both actions in the U.S. District Court for the Western District of Oklahoma and are continuing the action on their own. In July 2020, these actions were transferred to the U.S. District Court for the District of Columbia. TDS and UScellular believe that UScellular’s arrangements with the limited partnerships and the limited partnerships’ participation in the FCC auctions complied with applicable law and FCC rules. At this time, TDS cannot predict the outcome of any proceeding.

Other Commitments

Subsequent to December 31, 2020, UScellular committed to purchase wireless spectrum licenses for approximately $1,460 million inclusive of associated costs, subject to regulatory approval.

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Variable Interest Entities

12 Months Ended

Dec. 31, 2020

Variable Interest Entities [Abstract]

Variable Interest Entities

Note 15 Variable Interest Entities

Consolidated VIEs

TDS consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. TDS reviews the criteria for a controlling financial interest at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in TDS’ Form 10-K for the year ended December 31, 2020.

UScellular formed USCC EIP LLC (Seller/Sub-Servicer), USCC Receivables Funding LLC (Transferor) and the Trust, collectively the special purpose entities (SPEs), to facilitate a securitized borrowing using its equipment installment plan receivables. Under a Receivables Sale Agreement, UScellular wholly-owned, majority-owned and unconsolidated entities, collectively referred to as “affiliated entities”, transfer device equipment installment plan contracts to the Seller/Sub-Servicer. The Seller/Sub-Servicer aggregates device equipment installment plan contracts, and performs servicing, collection and all other administrative activities related to accounting for the equipment installment plan contracts. The Seller/Sub-Servicer sells the eligible equipment installment plan receivables to the Transferor, a bankruptcy remote entity, which subsequently sells the receivables to the Trust. The Trust, which is bankruptcy remote and isolated from the creditors of UScellular, will be responsible for issuing asset-backed variable funding notes (Notes), which are collateralized by the equipment installment plan receivables owned by the Trust. Given that UScellular has the power to direct the activities of these SPEs, and that these SPEs lack sufficient equity to finance their activities, UScellular is deemed to have a controlling financial interest in the SPEs and, therefore, consolidates them. All transactions with third parties (e.g., issuance of the asset-backed variable funding notes) will be accounted for as a secured borrowing due to the pledging of equipment installment plan contracts as collateral, significant continuing involvement in the transferred assets, subordinated interests of the cash flows, and continued evidence of control of the receivables. Refer to Note 12 — Debt, Receivables Securitization Agreement for additional details regarding the securitization agreement for which these entities were established.    

The following VIEs were formed to participate in FCC auctions of wireless spectrum licenses and to fund, establish, and provide wireless service with respect to any FCC wireless spectrum licenses won in the auctions:

▪Advantage Spectrum, L.P. (Advantage Spectrum) and Sunshine Spectrum, Inc., the general partner of Advantage Spectrum; and

▪King Street Wireless, L.P. (King Street Wireless) and King Street Wireless, Inc., the general partner of King Street Wireless.

These particular VIEs are collectively referred to as designated entities. The power to direct the activities that most significantly impact the economic performance of these VIEs is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships. The general partner of each partnership needs the consent of the limited partner, an indirect TDS subsidiary, to sell or lease certain wireless spectrum licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of these VIEs is shared, TDS has the most significant level of exposure to the variability associated with the economic performance of the VIEs, indicating that TDS is the primary beneficiary of the VIEs. Therefore, in accordance with GAAP, these VIEs are consolidated.

TDS also consolidates other VIEs that are limited partnerships that provide wireless service. A limited partnership is a variable interest entity unless the limited partners hold substantive participating rights or kick-out rights over the general partner. For certain limited partnerships, UScellular is the general partner and manages the operations. In these partnerships, the limited partners do not have substantive kick-out or participating rights and, further, such limited partners do not have the authority to remove the general partner. Therefore, these limited partnerships also are recognized as VIEs and are consolidated under the variable interest model.

The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in TDS’ Consolidated Balance Sheet.

December 31,	2020		2019
(Dollars in millions)
Assets
Cash and cash equivalents	$	18	$	19
Short-term investments	3		—
Accounts receivable	638		637
Inventory, net	3		5
Other current assets	21		7
Licenses	637		647
Property, plant and equipment, net	99		95
Operating lease right-of-use assets	37		42
Other assets and deferred charges	347		347
Total assets	$	1,803	$	1,799
Liabilities
Current liabilities	$	26	$	30
Long-term operating lease liabilities	34		39
Other deferred liabilities and credits	19		13
Total liabilities	$	79	$	82

Unconsolidated VIEs

TDS manages the operations of and holds a variable interest in certain other limited partnerships, but is not the primary beneficiary of these entities and, therefore, does not consolidate them under the variable interest model.

TDS’ total investment in these unconsolidated entities was $5 million at both December 31, 2020 and 2019, and is included in Investments in unconsolidated entities in TDS’ Consolidated Balance Sheet. The maximum exposure from unconsolidated VIEs is limited to the investment held by TDS in those entities.

Other Related Matters

TDS made contributions, loans or advances to its VIEs totaling $111 million, $255 million and $152 million during 2020, 2019 and 2018, respectively; of which $83 million in 2020, $214 million in 2019 and $116 million in 2018 are related to USCC EIP LLC as discussed above. TDS may agree to make additional capital contributions and/or advances to these or other VIEs and/or to their general partners to provide additional funding for operations or the development of wireless spectrum licenses granted in various auctions. TDS may finance such amounts with a combination of cash on hand, borrowings under its revolving credit or receivables securitization agreements and/or other long-term debt. There is no assurance that TDS will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support.

The limited partnership agreement of Advantage Spectrum also provides the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of UScellular, to purchase its interest in the limited partnership. The general partner’s put option related to its interest in Advantage Spectrum will be exercisable in 2021, and if not exercised at that time, will be exercisable in 2022. The greater of the carrying value of the general partner's investment or the value of the put option, net of any borrowings due to TDS, is recorded as Noncontrolling interests with redemption features in TDS’ Consolidated Balance Sheet. Also in accordance with GAAP, minority share of income or changes in the redemption value of the put option, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in TDS’ Consolidated Statement of Operations.

During the first quarter of 2018, TDS recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $6 million and decreasing Net income attributable to TDS shareholders by $6 million in 2018. TDS determined that this adjustment was not material to any of the periods impacted.

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Noncontrolling Interests

12 Months Ended

Dec. 31, 2020

Noncontrolling Interest [Abstract]

Noncontrolling Interests

Note 16 Noncontrolling Interests

The following schedule discloses the effects of Net income attributable to TDS shareholders and changes in TDS’ ownership interest in UScellular on TDS’ equity:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Net income attributable to TDS shareholders	$	226	$	121	$	135
Transfers (to) from noncontrolling interests
Change in TDS’ Capital in excess of par value from UScellular's issuance of UScellular shares	(38)		(23)		(30)
Change in TDS’ Capital in excess of par value from UScellular’s repurchases of UScellular shares	14		6		—
Purchase of ownership in subsidiaries from noncontrolling interests	(9)		—		—
Net transfers (to) from noncontrolling interests	(33)		(17)		(30)
Net income attributable to TDS shareholders after transfers (to) from noncontrolling interests	$	193	$	104	$	105

Mandatorily Redeemable Noncontrolling Interests in Finite-Lived Subsidiaries

TDS’ consolidated financial statements include certain noncontrolling interests that meet the GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable noncontrolling interests represent interests held by third parties in consolidated partnerships, where the terms of the underlying partnership agreement provide for a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest holders and TDS in accordance with the respective partnership agreements. The termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2092.

The estimated aggregate amount that would be due and payable to settle all of these noncontrolling interests, assuming an orderly liquidation of the finite-lived consolidated partnerships on December 31, 2020, net of estimated liquidation costs, is $20 million. This amount excludes redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated Balance Sheet. The estimate of settlement value was based on certain factors and assumptions which are subjective in nature. Changes in those factors and assumptions could result in a materially larger or smaller settlement amount. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2020, was $6 million, and is included in Noncontrolling interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the unrecognized appreciation of the noncontrolling interest holders’ share of the underlying net assets in the consolidated partnerships. Neither the noncontrolling interest holders’ share, nor TDS’ share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the consolidated financial statements.

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Common Shareholders' Equity

12 Months Ended

Dec. 31, 2020

Stockholders' Equity Note [Abstract]

Common Shareholders' Equity

Note 17 Common Shareholders’ Equity

Common Stock

Series A Common Shares are convertible on a share-for-share basis into Common Shares. In matters other than the election of directors, each Series A Common Share is entitled to ten votes per share, compared to one vote for each Common Share. The Series A Common Shares are entitled to elect eight directors, and the Common Shares elect four. TDS has reserved 7,284,000 Common Shares at December 31, 2020, for possible issuance upon conversion of Series A Common Shares.

The following table summarizes the number of Common and Series A Common Shares issued.

	Common Shares	Series A Common Shares	Common Treasury Shares
(Shares in millions)
Balance at December 31, 2017	126	7	22
Dividend reinvestment, incentive and compensation plans	—	—	(3)
Balance at December 31, 2018	126	7	19
Dividend reinvestment, incentive and compensation plans	—	—	(1)
Balance at December 31, 2019	126	7	18
Repurchase of Common Shares	—	—	1
Balance at December 31, 2020	126	7	19

On August 2, 2013, the Board of Directors of TDS authorized a $250 million stock repurchase program for the purchase of TDS Common Shares from time to time pursuant to open market purchases, block transactions, private purchases or otherwise, depending on market conditions. This authorization does not have an expiration date. As of December 31, 2020, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $185 million.

In November 2009, UScellular announced by Form 8-K that the Board of Directors of UScellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. In December 2016, the UScellular Board amended this authorization to provide that, beginning on January 1, 2017, the authorized repurchase amount with respect to a particular year will be any amount from zero to 1,300,000 Common Shares, as determined by the Pricing Committee of the Board of Directors, and that if the Pricing Committee did not specify an amount for any year, such amount would be zero for such year. The Pricing Committee has not specified any increase in the authorization since that time. The Pricing Committee also was authorized to decrease the cumulative amount of the authorization at any time, but has not taken any action to do so at this time. As of December 31, 2020, the total cumulative amount of Common Shares authorized to be purchased is 4,507,000. The authorization provides that share repurchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions. This authorization does not have an expiration date.

Tax-Deferred Savings Plan

At December 31, 2020,TDS has reserved 90,000 Common Shares for issuance under the TDS Tax-Deferred Savings Plan, a qualified profit‑sharing plan pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code. Participating employees have the option of investing their contributions and TDS’ contributions in a TDS Common Share fund, a UScellular Common Share fund or certain unaffiliated funds.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Stock Based Compensation

Note 18 Stock-Based Compensation

TDS Consolidated

The following table summarizes stock-based compensation expense recognized during 2020, 2019 and 2018:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Stock option awards	$	3	$	3	$	5
Restricted stock unit awards	30		33		30
Performance share unit awards	17		21		17
Deferred compensation bonus and matching stock unit awards	1		—		—
Awards under Non-Employee Director compensation plan	2		2		2
Total stock-based compensation, before income taxes	53		59		54
Income tax benefit	(13)		(15)		(14)
Total stock-based compensation expense, net of income taxes	$	40	$	44	$	40

At December 31, 2020, unrecognized compensation cost for all stock‑based compensation awards was $55 million and is expected to be recognized over a weighted average period of 2.0 years.

The following table provides a summary of the classification of stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,	2020		2019		2018
(Dollars in millions)
Selling, general and administrative expense	$	48	$	54	$	49
Cost of services expense	5		5		5
Total stock-based compensation	$	53	$	59	$	54

TDS’ tax benefits realized from the exercise of stock options and the vesting of other awards totaled $10 million in 2020.

TDS (Excluding UScellular)

The information in this section relates to stock‑based compensation plans using the equity instruments of TDS. Participants in these plans are employees of TDS Corporate and TDS Telecom and Non-employee Directors of TDS. Information related to plans using the equity instruments of UScellular are shown in the UScellular section following the TDS section.

Under the TDS Long-Term Incentive Plans, TDS may grant fixed and performance-based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees.

TDS had reserved 17,025,000 Common Shares at December 31, 2020, for equity awards granted and to be granted under the TDS Long-Term Incentive Plans in effect. At December 31, 2020, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, performance share awards and deferred compensation stock unit awards.

TDS has also established a Non-Employee Directors’ compensation plan under which it has reserved 182,000 TDS Common Shares at December 31, 2020, for issuance as compensation to members of the Board of Directors who are not employees of TDS.

TDS uses treasury stock to satisfy requirements for shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plan – Stock Options

Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over periods up to three years from the date of grant. Stock options outstanding at December 31, 2020, expire between 2021 and 2030. However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of TDS common stock on the date of grant.

TDS estimated the fair value of stock options granted in 2020, 2019 and 2018 using the Black-Scholes valuation model and the assumptions shown in the table below:

	2020		2019		2018
Expected life	6.2 years		6.2 years		6.3 years
Expected annual volatility rate	35.0	%	29.0	%	28.6	%
Dividend yield	3.6	%	2.1	%	2.5	%
Risk-free interest rate	0.5	%	2.4	%	2.9	%

Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving considerations to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. TDS believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on historical volatility of TDS’ common stock over a period commensurate with the expected life. The dividend yield assumption is equal to the dividends declared in the most recent year as a percentage of the share price on the date of grant. The risk-free interest rate assumption is determined using the U.S. Treasury Yield Curve Rate with a term length that approximates the expected life of the stock options.

A summary of TDS stock options (total and portion exercisable) and changes during 2020 is presented in the tables and narrative below.

Common Share Options	Number of Options	Weighted Average Exercise Prices		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2019	4,091,000	$	26.63
Granted	387,000	$	19.15
Forfeited	(4,000)	$	26.64
Expired	(188,000)	$	26.90
Outstanding at December 31, 2020	4,286,000	$	25.94	$	—	4.7
(3,176,000 exercisable)		$	26.50	$	—	3.4

The weighted average grant date fair value per share of the TDS stock options granted in 2020, 2019 and 2018 was $4.24, $7.70 and $6.33, respectively. The aggregate intrinsic value of TDS stock options exercised in 2019 and 2018 was $7 million and $14 million, respectively. There were no TDS stock options exercised in 2020. The aggregate intrinsic value at December 31, 2020, presented in the table above represents the total pre-tax intrinsic value (the difference between TDS’ closing stock prices and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all options been exercised on December 31, 2020.

Long-Term Incentive Plans – Restricted Stock Units

TDS also grants restricted stock unit awards to key employees. Each outstanding restricted stock unit is convertible into one Common Share Award. The restricted stock unit awards currently outstanding were granted in 2018, 2019 and 2020 and will vest in 2021, 2022 and 2023, respectively.

TDS estimates the fair value of restricted stock units by reducing the grant-date price of TDS’ shares by the present value of the dividends expected to be paid on the underlying shares during the requisite service period, discounted at the appropriate risk-free interest rate, since employees are not entitled to dividends declared on the underlying shares while the restricted stock is unvested. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. 

A summary of TDS nonvested restricted stock units and changes during 2020 is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,233,000	$	26.16
Granted	661,000	$	17.19
Vested	(377,000)	$	25.99
Forfeited	(21,000)	$	24.89
Nonvested at December 31, 2020	1,496,000	$	22.26

The total fair values as of the respective vesting dates of restricted stock units vested during 2020, 2019 and 2018 were $7 million, $11 million and $9 million, respectively. The weighted average grant date fair value per share of the restricted stock units granted in 2020, 2019 and 2018 was $17.19, $28.81 and $23.87, respectively.

Long-Term Incentive Plans – Performance Share Units

Beginning in 2016, TDS granted performance share units to certain TDS executive officers, and beginning in 2019, to certain key TDS Corporate and TDS Telecom employees. Each recipient may be entitled to shares of TDS common stock equal to 0% to 200% of a communicated target award depending on the achievement of predetermined performance-based and market-based operating targets over three years. Performance-based operating targets for the TDS awards include Total Revenue and Return on Capital. Market-based operating targets are measured against TDS’ total shareholder return relative to a defined peer group. Performance-based operating targets for the TDS Telecom employees' awards include Total Revenue, Return on Capital and Adjusted EBITDA Margin Percent. Performance shares accumulate dividend equivalents, which are forfeitable if the performance metrics are not achieved. If the predetermined performance-based and market-based operating targets are met, the TDS units granted in 2018, 2019 and 2020 will vest in 2021, 2022 and 2023, respectively, and the TDS Telecom employees' units granted in 2019 and 2020 will vest in 2022 and 2023, respectively.

TDS estimates fair value of performance-based operating targets using TDS’ closing stock price on the date of grant. An estimate of the number of performance units expected to vest based upon achieving the performance-based operating targets is made and the fair value is expensed on a straight-line basis over the requisite service period. Each reporting period these estimates are reviewed and stock compensation expense is adjusted accordingly to reflect the new estimates of total units expected to vest. If any part of the performance share units do not vest as a result of the established performance-based operating targets not being achieved, the related stock compensation expense is reversed.

TDS estimates the market-based operating target’s fair value using an internally developed valuation model. This estimated fair value approximated TDS’ closing stock price at the date of grant for market-based share units granted in 2020, 2019 and 2018. This market-based operating target value determined at the date of grant is expensed on a straight-line basis over the requisite service period and the stock compensation expense is not adjusted during the performance period for the subsequent changes in the value of the market-based unit awards and will not be reversed even if the market-based operating target is not achieved.

A summary of TDS nonvested performance share units and changes during 2020 is presented in the table below:

Common Performance Share Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	489,000	$	28.53
Granted	521,000	$	19.15
Vested	(63,000)	$	27.79
Change in units based on approved performance factors	4,000	$	27.79
Forfeited	(55,000)	$	27.83
Accumulated dividend equivalents	28,000	$	23.91
Nonvested at December 31, 2020	924,000	$	23.18

The total fair value of performance share units that vested during 2020 and 2019 was $2 million and $4 million, respectively. No performance share units vested during 2018. The weighted average grant date fair value per share of the performance share units granted in 2020, 2019 and 2018 was $19.15, $30.72 and $25.70, respectively.

Long-Term Incentive Plans – Deferred Compensation Stock Units

Certain TDS employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in TDS Common Share units. The amount of TDS’ matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% stock unit match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in TDS Common Share units and vest over three years.

The total fair values of deferred compensation stock units that vested during 2020, 2019 and 2018 were less than $1 million in each respective year. The weighted average grant date fair value per share of the deferred compensation stock units granted in 2020, 2019 and 2018 was $19.44, $31.05 and $28.96, respectively. As of December 31, 2020, there were 107,000 vested but unissued deferred compensation stock units valued at $2 million.

Compensation of Non-Employee Directors

TDS issued 43,000, 28,000 and 32,000 Common Shares under its Non-Employee Director plan in 2020, 2019 and 2018, respectively.

Dividend Reinvestment Plans

TDS had reserved 2,393,000 Common Shares at December 31, 2020, for issuance under Automatic Dividend Reinvestment and Stock Purchase Plans and 129,000 Series A Common Shares for issuance under the Series A Common Share Automatic Dividend Reinvestment Plan. These plans enabled holders of TDS’ Common Shares to reinvest cash dividends in Common Shares and holders of Series A Common Shares to reinvest cash dividends in Series A Common Shares. The purchase price of the shares is 95% of the market value, based on the average of the daily high and low sales prices for TDS’ Common Shares on the New York Stock Exchange for the ten trading days preceding the date on which the purchase is made. These plans are considered non-compensatory plans; therefore, no compensation expense is recognized for stock issued under these plans.

UScellular

The information in this section relates to stock‑based compensation plans using the equity instruments of UScellular. Participants in these plans are employees of UScellular and Non-employee Directors of UScellular. Information related to plans using the equity instruments of TDS are shown in the previous section.

UScellular has established the following stock‑based compensation plans: Long-Term Incentive Plans and a Non-Employee Director compensation plan.

Under the UScellular Long-Term Incentive Plans, UScellular may grant fixed and performance-based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2020, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, performance share awards and deferred compensation stock unit awards.

Under the Non-Employee Director compensation plan, UScellular may grant Common Shares to members of the Board of Directors who are not employees of UScellular or TDS.

At December 31, 2020, UScellular had reserved 12,193,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans and 105,000 Common Shares for issuance under the Non-Employee Director compensation plan.

UScellular uses treasury stock to satisfy requirements for Common Shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plans – Stock Options

UScellular's last stock option grant occurred in 2016.

Stock options outstanding, and the related weighted average exercise price, at December 31, 2020 and 2019 were 418,000 units at $42.23 and 460,000 units at $42.20, respectively. All stock options are exercisable and expire between 2021 and 2026.

The aggregate intrinsic value of UScellular stock options exercised in 2019 and 2018 was $3 million and $19 million, respectively. No stock options were exercised in 2020.

Long-Term Incentive Plans – Restricted Stock Units

Restricted stock unit awards granted to key employees generally vest after three years. The restricted stock unit awards currently outstanding were granted in 2018, 2019 and 2020 and will vest in 2021, 2022 and 2023, respectively.

UScellular estimates the fair value of restricted stock units based on the closing market price of UScellular shares on the date of grant. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

A summary of UScellular nonvested restricted stock units and changes during 2020 is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,461,000	$	40.90
Granted	1,020,000	$	29.18
Vested	(653,000)	$	35.54
Forfeited	(168,000)	$	34.81
Nonvested at December 31, 2020	1,660,000	$	36.43

The total fair value of restricted stock units that vested during 2020, 2019 and 2018 was $20 million, $25 million and $16 million, respectively. The weighted average grant date fair value per share of the restricted stock units granted in 2020, 2019 and 2018 was $29.18, $46.81 and $38.19, respectively.

Long-Term Incentive Plans – Performance Share Units

Beginning in 2017, UScellular granted performance share units to key employees. The performance share units generally vest after three years. Each recipient may be entitled to shares of UScellular common stock equal to 50% to 200% of a communicated target award depending on the achievement of predetermined performance-based operating targets over the performance period, which is generally a one-year period beginning on January 1 in the year of grant to December 31 in the year of grant. The remaining time through the end of the vesting period is considered the “time-based period”. Performance-based operating targets for grants made prior to 2020 include Simple Free Cash Flow, Consolidated Total Operating Revenues and Postpaid Handset Voluntary Defections, and for grants made during 2020 include Consolidated Total Service Revenues, Consolidated Operating Cash Flow, Consolidated Capital Expenditures and Postpaid Handset Voluntary Defections. Subject to vesting during the time-based period, the performance share unit award agreement provides that in no event shall the award be less than 50% of the target opportunity as of the grant date. The performance share units currently outstanding were granted in 2018, 2019 and 2020 and will vest in 2021, 2022 and 2023, respectively.

Additionally, UScellular granted performance share units during 2020 to a newly appointed President and Chief Executive Officer. The recipient may be entitled to shares of UScellular common stock equal to 100% of the communicated target award depending on the achievement of predetermined performance-based operating targets over the performance period, which is any two calendar-year period commencing no earlier than January 1, 2021 and ending no later than December 31, 2026. Performance-based operating targets include Average Total Revenue Growth and Average Annual Return on Capital. If one, or both, of the performance targets are not satisfied, the award will be forfeited.

UScellular estimates the fair value of performance share units using UScellular’s closing stock price on the date of grant. An estimate of the number of performance share units expected to vest based upon achieving the performance-based operating targets is made and the aggregate fair value is expensed on a straight-line basis over the requisite service period. Each reporting period, during the performance period, the estimate of the number of performance share units expected to vest is reviewed and stock compensation expense is adjusted as appropriate to reflect the revised estimate of the aggregate fair value of the performance share units expected to vest. 

A summary of UScellular’s nonvested performance share units and changes during 2020 is presented in the table below:

Common Performance Share Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,245,000	$	40.16
Granted	582,000	$	29.71
Vested	(398,000)	$	36.92
Change in units based on approved performance factors	20,000	$	46.43
Forfeited	(144,000)	$	40.05
Nonvested at December 31, 2020	1,305,000	$	36.60

The total fair value of performance share units that vested during 2020 and 2019 was $11 million and less than $1 million, respectively. No performance share units vested during 2018. The weighted average grant date fair value per share of the performance share units granted in 2020, 2019 and 2018 was $29.71, $46.43 and $38.81, respectively.

Long-Term Incentive Plans – Deferred Compensation Stock Units

Certain UScellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in UScellular Common Share stock units. The amount of UScellular’s matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in UScellular Common Share stock units and vest over three years.

The total fair value of deferred compensation stock units that vested during 2020 was $1 million. The total fair value of deferred compensation stock units that vested during 2019 and 2018 was less than $1 million in each respective year. The weighted average grant date fair value per share of the deferred compensation stock units granted in 2020 and 2018 was $31.79 and $40.72, respectively. There were no deferred compensation stock units granted during 2019. As of December 31, 2020, there were 63,000 vested but unissued deferred compensation stock units valued at $2 million.

Compensation of Non-Employee Directors

UScellular issued 19,000, 13,000 and 18,000 Common Shares in 2020, 2019 and 2018, respectively, under its Non-Employee Director compensation plan.

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Business Segment Information

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Business Segment Information

Note 19 Business Segment Information

UScellular and TDS Telecom are billed for services they receive from TDS, consisting primarily of information processing, accounting and finance, and general management services. Such billings are based on expenses specifically identified to UScellular and TDS Telecom and on allocations of common expenses. Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to UScellular and TDS Telecom are reflected in the accompanying business segment information on a basis that is representative of what they would have been if UScellular and TDS Telecom operated on a stand-alone basis.

Financial data for TDS’ reportable segments for 2020, 2019 and 2018, is as follows. See Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements for additional information.

			TDS Telecom
Year ended or as of December 31, 2020	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	3,067	$	684	$	292	$	975	$	94	$	4,136
Equipment and product sales	970		1		—		1		118		1,089
Total operating revenues	4,037		685		292		976		212		5,225
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	782		269		123		392		70		1,244
Cost of equipment and products	1,011		1		—		1		98		1,110
Selling, general and administrative	1,368		199		72		270		43		1,681
Depreciation, amortization and accretion	683		124		78		203		23		909
(Gain) loss on asset disposals, net	25		—		1		1		1		27
(Gain) loss on license sales and exchanges, net	(5)		—		—		—		—		(5)
Operating income (loss)	173		92		18		110		(24)		259
Equity in earnings of unconsolidated entities	179		—		—		—		2		181
Interest and dividend income	8		4		1		5		2		15
Gain (loss) on investments	2		—		—		—		—		2
Interest expense	(112)		4		—		4		(60)		(168)
Other, net	—		(1)		—		(1)		—		(1)
Income (loss) before income taxes	250		99		18		117		(79)		288
Income tax expense (benefit)2	17						18		(16)		19
Net income (loss)	233						100		(64)		269
Add back:
Depreciation, amortization and accretion	683		124		78		203		23		909
(Gain) loss on asset disposals, net	25		—		1		1		1		27
(Gain) loss on license sales and exchanges, net	(5)		—		—		—		—		(5)
Gain (loss) on investments	(2)		—		—		—		—		(2)
Interest expense	112		(4)		—		(4)		60		168
Income tax expense (benefit)2	17						18		(16)		19
Adjusted EBITDA3	$	1,063	$	220	$	97	$	317	$	5	$	1,385
Investments in unconsolidated entities	$	435	$	4	$	—	$	4	$	38	$	477
Total assets	$	9,681	$	1,641	$	730	$	2,359	$	485	$	12,525
Capital expenditures	$	940	$	293	$	75	$	368	$	9	$	1,317

			TDS Telecom
Year Ended or as of December 31, 2019	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	3,035	$	682	$	247	$	928	$	96	$	4,059
Equipment and product sales	987		1		—		1		129		1,117
Total operating revenues	4,022		683		247		930		224		5,176
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	756		263		105		368		78		1,202
Cost of equipment and products	1,028		1		—		1		106		1,135
Selling, general and administrative	1,406		199		62		260		51		1,717
Depreciation, amortization and accretion	702		132		68		200		30		932
(Gain) loss on asset disposals, net	19		(8)		1		(7)		—		12
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		—		(1)
Operating income (loss)	112		96		11		107		(40)		179
Equity in earnings of unconsolidated entities	166		—		—		—		2		168
Interest and dividend income	17		10		2		12		—		29
Interest expense	(110)		3		—		3		(58)		(165)
Income (loss) before income taxes	185		110		13		122		(96)		211
Income tax expense (benefit)2	52						30		(18)		64
Net income (loss)	133						92		(78)		147
Add back:
Depreciation, amortization and accretion	702		132		68		200		30		932
(Gain) loss on asset disposals, net	19		(8)		1		(7)		—		12
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		—		(1)
Interest expense	110		(3)		—		(3)		58		165
Income tax expense (benefit)2	52						30		(18)		64
Adjusted EBITDA3	$	1,015	$	231	$	82	$	313	$	(9)	$	1,319
Investments in unconsolidated entities	$	447	$	4	$	—	$	4	$	37	$	488
Total assets4	$	8,164	$	1,471	$	734	$	2,196	$	421	$	10,781
Capital expenditures	$	710	$	243	$	73	$	316	$	6	$	1,032

			TDS Telecom
Year Ended or as of December 31, 2018	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	2,978	$	697	$	230	$	925	$	96	$	3,999
Equipment and product sales	989		2		—		2		119		1,110
Total operating revenues	3,967		699		230		927		215		5,109
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	758		266		104		369		79		1,206
Cost of equipment and products	1,031		1		—		1		98		1,130
Selling, general and administrative	1,388		197		57		254		52		1,694
Depreciation, amortization and accretion	640		142		69		212		31		883
(Gain) loss on asset disposals, net	10		(3)		1		(2)		1		9
(Gain) loss on license sales and exchanges, net	(18)		—		—		—		—		(18)
Operating income (loss)	158		95		(2)		93		(46)		205
Equity in earnings of unconsolidated entities	159		—		—		—		1		160
Interest and dividend income	15		7		1		8		3		26
Interest expense	(116)		2		—		2		(58)		(172)
Other, net	(1)		3		—		2		1		2
Income (loss) before income taxes	215		106		(1)		105		(99)		221
Income tax expense (benefit)2	51						16		(21)		46
Net income (loss)	164						89		(78)		175
Add back:
Depreciation, amortization and accretion	640		142		69		212		31		883
(Gain) loss on asset disposals, net	10		(3)		1		(2)		1		9
(Gain) loss on license sales and exchanges, net	(18)		—		—		—		—		(18)
Interest expense	116		(2)		—		(2)		58		172
Income tax expense (benefit)2	51						16		(21)		46
Adjusted EBITDA3	$	963	$	243	$	70	$	313	$	(9)	$	1,267
Investments in unconsolidated entities	$	441	$	4	$	—	$	4	$	35	$	480
Total assets	$	7,274	$	1,304	$	639	$	1,934	$	575	$	9,783
Capital expenditures	$	515	$	176	$	56	$	232	$	20	$	767

Numbers may not foot due to rounding.

1TDS Telecom Total includes eliminations between the Wireline and Cable segments.

2Income tax expense (benefit) is not provided at the individual segment level for Wireline and Cable. TDS calculates income tax expense for “TDS Telecom Total”.

3Adjusted earnings before interest, taxes, depreciation, amortization and accretion (Adjusted EBITDA) is a segment measure reported to the chief operating decision maker for purposes of assessing their performance. Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation above. TDS believes Adjusted EBITDA is a useful measure of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. 

4As of January 1, 2019, UScellular adopted ASC 842 using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2019 includes the impacts of ASC 842, but prior periods remain as previously reported. See Note 10 — Leases for additional information.

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Supplemental Cash Flow Disclosures

12 Months Ended

Dec. 31, 2020

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Disclosures

Note 20 Supplemental Cash Flow Disclosures

Following are supplemental cash flow disclosures regarding interest paid and income taxes paid.

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Interest paid	$	160	$	162	$	168
Income taxes paid, net of refunds received	(23)		44		40

Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, TDS and UScellular withhold shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. TDS and UScellular then pay the amount of the required tax withholdings to the taxing authorities in cash.

TDS:
Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Common Shares withheld	153,000		814,000		676,000
Aggregate value of Common Shares withheld	$	3	$	29	$	21
Cash receipts upon exercise of stock options	—		2		48
Cash disbursements for payment of taxes	(3)		(8)		(6)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(3)	$	(6)	$	42

UScellular:
Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Common Shares withheld	376,000		452,000		1,550,000
Aggregate value of Common Shares withheld	$	11	$	23	$	73
Cash receipts upon exercise of stock options	—		1		29
Cash disbursements for payment of taxes	(11)		(10)		(11)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(11)	$	(9)	$	18

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Certain Relationships And Related Transactions

12 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

Certain Relationships and Related Transactions

Note 21 Certain Relationships and Related Transactions

The following persons are partners of Sidley Austin LLP, the principal law firm of TDS and its subsidiaries: Walter C.D. Carlson, a trustee and beneficiary of a voting trust that controls TDS, the non-executive Chairman of the Board and member of the Board of Directors of TDS and a director of UScellular, a subsidiary of TDS and certain subsidiaries of TDS; and Stephen P. Fitzell, the General Counsel and/or an Assistant Secretary of TDS and UScellular and certain other subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS or its subsidiaries. TDS, UScellular and their subsidiaries incurred legal costs from Sidley Austin LLP of $11 million, $10 million and $10 million in 2020, 2019 and 2018, respectively.

The Audit Committee of the Board of Directors of TDS is responsible for the review and evaluation of all related-party transactions as such term is defined by the rules of the New York Stock Exchange.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Principles of Consolidation

The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of TDS and subsidiaries in which it has a controlling financial interest, including UScellular and TDS Telecom. In addition, the consolidated financial statements include certain entities in which TDS has a variable interest that requires consolidation under GAAP. See Note 15 — Variable Interest Entities for additional information relating to TDS’ VIEs. Intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill, indefinite-lived intangible assets and income taxes.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Cash and cash equivalents subject to contractual restrictions are classified as restricted cash.

Accounts Receivable

UScellular’s accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices and accessories under installment plans, by agents and third-party distributors for sales of equipment to them and by other wireless carriers whose customers have used UScellular’s wireless systems.

TDS Telecom’s accounts receivable primarily consist of amounts owed by customers for services and products provided, by state and federal governments for grants and support funds, and by interexchange carriers for long-distance and data traffic, which TDS Telecom carries on its network.

Allowance for Doubtful Accounts

TDS estimates expected credit losses related to accounts receivable balances based on a review of available and relevant information including current economic conditions, projected economic conditions, historical loss experience, account aging, and other factors that could affect collectability. Expected credit losses are determined for each pool of accounts receivable balances that share similar risk characteristics. The allowance for doubtful accounts is the best estimate of the amount of expected credit losses related to existing accounts receivable. TDS does not have any off-balance sheet credit exposure related to its customers.

Inventory

Inventory consists primarily of wireless devices stated at the lower of cost, which approximates cost determined on the first-in first-out basis, or net realizable value. Net realizable value is determined by reference to the stand-alone selling price.

Licenses and Goodwill

Licenses

Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (FCC) wireless spectrum licenses that generally provide UScellular with the exclusive right to utilize designated radio spectrum within specific geographic service areas to provide wireless service. Although wireless spectrum licenses are issued for a fixed period of time, generally ten years, or in some cases twelve or fifteen years, the FCC has granted license renewals routinely and at a nominal cost. The wireless spectrum licenses held by UScellular expire at various dates. UScellular believes that it is probable that its future wireless spectrum license renewal applications will be granted. UScellular determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of the wireless spectrum licenses. Therefore, UScellular has determined that wireless spectrum licenses are indefinite-lived intangible assets.

UScellular performs its annual impairment assessment of wireless spectrum licenses as of November 1 of each year or more frequently if there are events or circumstances that cause UScellular to believe it is more likely than not that the carrying value of wireless spectrum licenses exceeds fair value. For purposes of its impairment testing, UScellular separated its FCC wireless spectrum licenses into eight units of accounting. The eight units of accounting consisted of one unit of accounting for developed operating market wireless spectrum licenses (built wireless spectrum licenses) and seven units of accounting for geographic non-operating market wireless spectrum licenses (unbuilt wireless spectrum licenses). 

UScellular performed a qualitative impairment assessment in 2020 and a quantitative impairment assessment in 2019 to determine whether the wireless spectrum licenses were impaired. Based on the impairment assessments performed, UScellular did not have an impairment of its wireless spectrum licenses in 2020 or 2019. See Note 7 — Intangible Assets for additional details related to wireless spectrum licenses.

Goodwill

TDS has Goodwill as a result of its acquisition of wireline and cable companies. TDS performs its annual impairment assessment of Goodwill as of November 1 of each year or more frequently if there are events or circumstances that cause TDS to believe it is more likely than not that the carrying value of individual reporting units exceeds their respective fair values. Goodwill impairment loss will be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

For purposes of conducting its Goodwill impairment tests, TDS Telecom identified two reporting units: Wireline and Cable. The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units for the annual impairment tests. Based on the annual impairment assessments performed, Wireline and Cable did not have an impairment of their Goodwill in 2020 or 2019.

Franchise Rights

TDS Telecom has franchise rights as a result of acquisitions of cable businesses. Franchise rights are intangible assets that provide their holder with the right to operate a business in a certain geographical location as sanctioned by the franchiser, usually a government agency. Franchise rights are generally granted for ten years and may be renewed for additional terms upon approval by the granting authority. TDS anticipates that future renewals of its franchise rights will be granted. TDS reviews franchise rights for impairment whenever events or changes in circumstances indicate that the assets might be impaired. TDS re-evaluates the useful life of franchise rights each year to determine if changes in technology or other business changes would warrant a revision of its remaining useful life.

Investments in Unconsolidated Entities

For its equity method investments for which financial information is readily available, TDS records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, TDS records its equity in the earnings of the entity on a one quarter lag basis.

Property, Plant and Equipment

Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets.Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to Cost of services or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and recording it, together with proceeds, if any, and net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), as a gain or loss, as appropriate. Certain Wireline segment assets use the group depreciation method. Accordingly, when a group method asset is retired in the ordinary course of business, the original cost of the asset and accumulated depreciation in the same amount are removed, with no gain or loss recognized on the disposition.TDS capitalizes certain costs of developing new information systems. Software licenses that qualify for capitalization as an asset are accounted for as the acquisition of an intangible asset and the incurrence of a liability to the extent that the license fees are not fully paid at acquisition.

Depreciation and Amortization

Depreciation is provided using the straight-line method over the estimated useful life of the related asset, except for certain Wireline segment assets, which use the group depreciation method. The group depreciation method develops a depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually. TDS depreciates leasehold improvement assets over periods ranging from one year to thirty years; such periods approximate the shorter of the assets’ economic lives or the specific lease terms.Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. There were no material changes to the assigned useful lives of the various categories of property, plant and equipment in 2020, 2019 or 2018. However, in 2020 and 2019, depreciation for certain specific assets was accelerated due to changes in technology.

Impairment of Long-Lived Assets

TDS reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. UScellular has one asset group and TDS Telecom has two asset groups for purposes of assessing property, plant and equipment for impairment based on the integrated nature of its network, assets and operations. The cash flows generated by each of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Agent Liabilities

UScellular has relationships with agents, which are independent businesses that obtain customers for UScellular. At December 31, 2020 and 2019, UScellular had accrued $55 million and $59 million, respectively, in agent related liabilities. These amounts are included in Other current liabilities in the Consolidated Balance Sheet.

Debt Issuance Costs

Debt issuance costs include underwriters’ and legal fees and other charges related to issuing and renewing various borrowing instruments and other long–term agreements, and are amortized over the respective term of each instrument. Debt issuance costs related to TDS’ and UScellular's revolving credit agreements and UScellular's receivables securitization agreement are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. All other debt issuance costs are presented as an offset to the related debt obligation in the Consolidated Balance Sheet.

Asset Retirement Obligations

TDS records asset retirement obligations for the fair value of legal obligations associated with asset retirements and a corresponding increase in the carrying amount of the related long-lived asset in the period in which the obligations are incurred. In periods subsequent to initial measurement, TDS recognizes changes in the liability resulting from the passage of time and updates to the timing or the amount of the original estimates. The liability is accreted to its estimated settlement date value over the period to the estimated settlement date. The change in the carrying amount of the long-lived asset is depreciated over the average remaining life of the related asset.

Treasury Shares

Common Shares repurchased by TDS are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, TDS determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Capital in excess of par value or Retained earnings.

Revenue Recognition

Revenues from sales of equipment and products are recognized when control has transferred to the customer, agent or third-party distributor. Service revenues are recognized as the related service is provided.

The following is a description of principal activities from which TDS generates its revenues.

Services and products	Nature, timing of satisfaction of performance obligations, and significant payment terms
Wireless services	Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis.
Wireless devices and accessories	UScellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. UScellular also sells wireless devices to agents and other third-party distributors for resale. UScellular frequently discounts wireless devices sold to new and current customers. UScellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to UScellular. UScellular recognizes revenue in Equipment and product sales revenues when control of the device or accessory is transferred to the customer, agent or third-party distributor, which is generally upon delivery.
Wireless roaming	UScellular receives roaming revenues when other wireless carriers’ customers use UScellular’s wireless systems. UScellular recognizes revenue in Service revenues when the roaming service is provided.
Wireless Eligible Telecommunications Carrier (ETC) Revenues	Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which UScellular is entitled to receive for such period, as determined and approved in connection with UScellular’s designation as an ETC in various states.
Wireless tower rents	UScellular receives tower rental revenues when another carrier leases tower space on a UScellular owned tower. UScellular recognizes revenue in Service revenues in the period during which the services are provided.
Wireline services	Wireline services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Wireline services are generally billed and paid in advance on a monthly basis.
Wireline wholesale revenues	Wholesale revenues include network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom’s network, special access services and state and federal support payments, including A-CAM. Wholesale revenues are recorded as the related service is provided.
Cable services	Cable services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Cable services are generally billed and paid in advance on a monthly basis.
IT hardware sales	TDS recognizes equipment revenue when it no longer has any requirements to perform, when title has passed and when the products are accepted by the customer.
Hosted and managed services	HMS Service revenues consist of cloud and hosting solutions, managed services, Enterprise Resource Planning (ERP) application management, colocation services, and IT hardware related maintenance and professional services. Revenues related to these services are recognized as services are provided.

Significant Judgments

As a practical expedient, TDS groups similar contracts or similar performance obligations together into portfolios of contracts or performance obligations if doing so does not result in a significant difference from accounting for the individual contracts discretely. TDS applies this grouping method for the following types of transactions: device activation fees, contract acquisition costs, contract fulfillment costs, and certain customer promotions. Contract portfolios are recognized over the respective expected customer lives or terms of the contracts.

Services are deemed to be highly interrelated when the method and timing of transfer and performance risk are the same. Highly interrelated services that are determined to not be distinct have been grouped into a single performance obligation. Each month of services promised is a performance obligation. The series of monthly service performance obligations promised over the course of the contract are combined into a single performance obligation for purposes of the allocation.

TDS has made judgments regarding transaction price, including but not limited to issues relating to variable consideration, time value of money, returns and non-cash consideration. When determined to be significant in the context of the contract, these items are considered in the valuation of transaction price at contract inception or modification, as appropriate.

Multiple Performance Obligations

UScellular and TDS Telecom sell bundled service and equipment offerings. In these instances, TDS recognizes its revenue based on the relative standalone selling prices for each distinct service or equipment performance obligation, or bundles thereof. TDS estimates the standalone selling price of the device or accessory to be its retail price excluding discounts. TDS estimates the standalone selling price of wireless service to be the price offered to customers on month-to-month contracts.

Incentives

Discounts, incentives, and rebates to agents and end customers that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. 

From time to time, UScellular may offer certain promotions to incentivize customers to switch to, or to purchase additional services from, UScellular. Under these types of promotions, an eligible customer may receive an incentive in the form of a discount off additional services purchased shown as a credit to the customer’s monthly bill. UScellular accounts for the future discounts as material rights at the time of the initial transaction by allocating and deferring revenue based on the relative proportion of the future discounts in comparison to the aggregate initial purchase. The deferred revenue will be recognized as service revenue in future periods. 

TDS records amounts collected from customers and remitted to governmental authorities on a net basis within a liability account if the amount is assessed upon the customer and TDS merely acts as an agent in collecting the amount on behalf of the imposing governmental authority. If the amount is assessed upon TDS, then amounts collected from customers are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations.

For contracts that involve multiple element service and equipment offerings, the transaction price is allocated to each performance obligation based on its relative standalone selling price. When payment is collected in advance of delivery of goods or services, a contract liability is recorded. A contract asset is recorded when revenue is recognized in advance of TDS’ right to receive consideration. Once there is an unconditional right to receive the consideration, TDS bills the customer under the terms of the respective contract and the amounts are recorded as receivables.

TDS recognizes Equipment and product sales revenue when the equipment is delivered to the customer and a corresponding contract asset or liability is recorded for the difference between the amount of revenue recognized and the amount billed to the customer in cases where discounts are offered. The contract asset or liability is reduced over the contract term as service is provided and billed to the customer.

As practical expedients, revenue related to contracts of less than one year, generally month-to-month contracts, and contracts with a fixed per-unit price and variable quantity, are excluded from these estimates.TDS expects that commission fees paid as a result of obtaining contracts are recoverable and therefore TDS defers and amortizes these costs. As a practical expedient, costs with an amortization period of one year or less are expensed as incurred.Deferred commission fees and fulfillment costs are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term.

Advertising Costs

TDS expenses advertising costs as incurred. Advertising costs totaled $213 million, $227 million and $230 million in 2020, 2019 and 2018, respectively.

Income Taxes

TDS files a consolidated federal income tax return. Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the enacted tax rates in effect when the temporary differences are expected to reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. TDS evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. Deferred taxes are reported as a net non-current asset or liability by jurisdiction. Any corresponding valuation allowance to reduce the amount of deferred tax assets is also recorded as non-current.

Stock-Based Compensation and Other Plans

TDS has established long-term incentive plans, dividend reinvestment plans, and a non-employee director compensation plan. The dividend reinvestment plan of TDS is not considered a compensatory plan and, therefore, recognition of compensation costs for grants made under this plan is not required. All other plans are considered compensatory plans; therefore, recognition of costs for grants made under these plans is required.TDS recognizes stock compensation expense based upon the fair value of the specific awards granted using established valuation methodologies. The amount of stock compensation cost recognized on either a straight-line basis or graded attribution method is based on the portion of the award that is expected to vest over the requisite service period, which generally represents the vesting period. Stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments and subsequently amended the standard with additional Accounting Standards Updates, collectively referred to as ASC 326. This standard requires entities to use a new forward-looking, expected loss model to estimate credit losses and requires additional disclosures relating to the credit quality of trade and other receivables. TDS adopted the provisions of ASC 326 on January 1, 2020, using a modified retrospective method. Under this method, TDS applied the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 326 had no material impact on retained earnings.

In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the existing guidance for capitalizing implementation costs for an arrangement that has a software license. The service element of a hosting arrangement will continue to be expensed as incurred. Any capitalized implementation costs will be amortized over the period of the service contract. TDS adopted ASU 2018-15 on January 1, 2020, using the prospective method. The adoption of ASU 2018-15 did not have a significant impact on TDS' financial position or results of operations.

TDS' cloud-hosted arrangements that are service contracts consist primarily of software used to perform administrative functions. Implementation costs related to TDS' cloud-hosted arrangements, which are recorded in Prepaid expenses and Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020
(Dollars in millions)
Implementation costs, gross	$	69
Accumulated amortization	(13)
Implementation costs, net	$	56

These costs are amortized over the period of the service contract, which is generally three to five years. Amortization of implementation costs was $11 million for the year ended December 31, 2020 and was included in Selling, general and administrative expenses.

Lessee Agreements

A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of TDS’ leases are classified as operating leases, although it does have a small number of finance leases. TDS’ most significant leases are for land and tower spaces, network facilities, retail spaces, and offices.

TDS has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, TDS uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on TDS' unsecured rates, adjusted to approximate the rates at which TDS would be required to borrow on a collateralized basis over a term similar to the recognized lease term. TDS applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. The cost of nonlease components in TDS’ lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price.

Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. TDS’ variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities.

The identified lease term determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of TDS’ leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when TDS is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless TDS is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, TDS has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes.

Lessor Agreements

TDS’ most significant lessor leases are for tower space and colocation space. All of TDS’ lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. TDS’ lessor agreements with lease and nonlease components are generally accounted for separately; however, certain service agreements with insignificant lease components are accounted for as nonlease transactions.

The identified lease term determines the periods to which revenue is allocated over the term of the lease. Many of TDS’ leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when TDS is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise.

Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. TDS’ variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income.

Legal proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.

Variable Interest Entities

TDS consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. TDS reviews the criteria for a controlling financial interest at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in TDS’ Form 10-K for the year ended December 31, 2020.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Table)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Reconciliation of cash, cash equivalents and restricted cash

The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows.

December 31,	2020		2019
(Dollars in millions)
Cash and cash equivalents	$	1,429	$	465
Restricted cash included in Other current assets	23		9
Cash, cash equivalents and restricted cash in the statement of cash flows	$	1,452	$	474

Implementation costs

Implementation costs related to TDS' cloud-hosted arrangements, which are recorded in Prepaid expenses and Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020
(Dollars in millions)
Implementation costs, gross	$	69
Accumulated amortization	(13)
Implementation costs, net	$	56

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Revenue Recognition (Tables)

12 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Multiple-deliverable Arrangements

The following is a description of principal activities from which TDS generates its revenues.

Services and products	Nature, timing of satisfaction of performance obligations, and significant payment terms
Wireless services	Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis.
Wireless devices and accessories	UScellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. UScellular also sells wireless devices to agents and other third-party distributors for resale. UScellular frequently discounts wireless devices sold to new and current customers. UScellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to UScellular. UScellular recognizes revenue in Equipment and product sales revenues when control of the device or accessory is transferred to the customer, agent or third-party distributor, which is generally upon delivery.
Wireless roaming	UScellular receives roaming revenues when other wireless carriers’ customers use UScellular’s wireless systems. UScellular recognizes revenue in Service revenues when the roaming service is provided.
Wireless Eligible Telecommunications Carrier (ETC) Revenues	Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which UScellular is entitled to receive for such period, as determined and approved in connection with UScellular’s designation as an ETC in various states.
Wireless tower rents	UScellular receives tower rental revenues when another carrier leases tower space on a UScellular owned tower. UScellular recognizes revenue in Service revenues in the period during which the services are provided.
Wireline services	Wireline services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Wireline services are generally billed and paid in advance on a monthly basis.
Wireline wholesale revenues	Wholesale revenues include network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom’s network, special access services and state and federal support payments, including A-CAM. Wholesale revenues are recorded as the related service is provided.
Cable services	Cable services include broadband, video and voice services. Revenue is recognized in Service revenues as service is provided to the customer. Cable services are generally billed and paid in advance on a monthly basis.
IT hardware sales	TDS recognizes equipment revenue when it no longer has any requirements to perform, when title has passed and when the products are accepted by the customer.
Hosted and managed services	HMS Service revenues consist of cloud and hosting solutions, managed services, Enterprise Resource Planning (ERP) application management, colocation services, and IT hardware related maintenance and professional services. Revenues related to these services are recognized as services are provided.

Disaggregation of Revenues

In the following table, TDS' revenues are disaggregated by type of service, which represents the relevant categorization of revenues for TDS' reportable segments, and timing of recognition. Service revenues are recognized over time and Equipment and product sales are point in time.

			TDS Telecom
Year Ended December 31, 2020	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,686	$	—	$	—	$	—	$	—	$	2,686
Inbound roaming	152		—		—		—		—		152
Residential	—		349		245		594		—		594
Commercial	—		152		46		198		—		198
Wholesale	—		181		—		181		—		181
Other service	152		—		—		(1)		69		220
Service revenues from contracts with customers	2,990		683		290		972		69		4,031
Equipment and product sales	970		1		—		1		118		1,089
Total revenues from contracts with customers2	$	3,960	$	683	$	290	$	973	$	187	$	5,120

			TDS Telecom
Year Ended December 31, 2019	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,650	$	—	$	—	$	—	$	—	$	2,650
Inbound roaming	174		—		—		—		—		174
Residential	—		328		205		533		—		533
Commercial	—		168		41		209		—		209
Wholesale	—		185		—		185		—		185
Other service	137		—		—		(1)		72		208
Service revenues from contracts with customers	2,961		681		246		926		72		3,959
Equipment and product sales	987		1		—		1		129		1,117
Total revenues from contracts with customers2	$	3,948	$	682	$	246	$	927	$	201	$	5,076

			TDS Telecom
Year Ended December 31, 2018	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
Type of service:
Retail service	$	2,623	$	—	$	—	$	—	$	—	$	2,623
Inbound roaming	154		—		—		—		—		154
Residential	—		321		188		509		—		509
Commercial	—		184		42		226		—		226
Wholesale	—		191		—		191		—		191
Other service	135		—		—		(1)		72		206
Service revenues from contracts with customers	2,912		696		230		925		72		3,909
Equipment and product sales	989		2		—		2		119		1,110
Total revenues from contracts with customers2	$	3,901	$	698	$	230	$	927	$	191	$	5,019

Numbers may not foot due to rounding.

1TDS Telecom Total includes eliminations between the Wireline and Cable segments.

2Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.

Contract with Customer, Assets and Liabilities

The following table provides balances for contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet, and contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.

December 31,	2020		2019
(Dollars in millions)
Contract assets	$	13	$	10
Contract liabilities	$	216	$	197

Revenue recognized related to contract liabilities existing at January 1, 2020 was $172 million for the year ended December 31, 2020.

Remaining Performance Obligations

The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of December 31, 2020, and may vary from actual results. As practical expedients, revenue related to contracts of less than one year, generally month-to-month contracts, and contracts with a fixed per-unit price and variable quantity, are excluded from these estimates.

	Service Revenues
(Dollars in millions)
2021	$	377
2022	160
Thereafter	158
Total	$	695

Contract Cost Assets

Contract cost asset balances, which are recorded in Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

December 31,	2020		2019
(Dollars in millions)
Costs to obtain contracts
Sales commissions	$	139	$	146
Fulfillment costs
Installation costs	10		11
Total contract cost assets	$	149	$	157

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Fair Value Measurements (Table)

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair value measurements

TDS has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.

	Level within the Fair Value Hierarchy	December 31, 2020				December 31, 2019
		Book Value		Fair Value		Book Value		Fair Value
(Dollars in millions)
Cash and cash equivalents	1	$	1,429	$	1,429	$	465	$	465
Short-term investments	1	3		3		—		—
Long-term debt
Retail	2	2,753		2,809		1,753		1,796
Institutional	2	535		707		534		594
Other	2	230		230		84		84

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Equipment Installment Plans (Tables)

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Equipment installment plan receivables

The following table summarizes equipment installment plan receivables as of December 31, 2020 and 2019.

December 31,	2020		2019
(Dollars in millions)
Equipment installment plan receivables, gross	$	1,007	$	1,008
Allowance for credit losses	(78)		(84)
Equipment installment plan receivables, net	$	929	$	924
Net balance presented in the Consolidated Balance Sheet as:
Accounts receivable — Customers and agents (Current portion)	$	590	$	587
Other assets and deferred charges (Non-current portion)	339		337
Equipment installment plan receivables, net	$	929	$	924

Equipment installment plan receivables credit categories

The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:

	December 31, 2020										December 31, 2019
	Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total		Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total
(Dollars in millions)
Unbilled	$	819	$	98	$	22	$	9	$	948	$	812	$	99	$	23	$	8	$	942
Billed — current	36		5		1		1		43		37		5		2		1		45
Billed — past due	8		5		2		1		16		11		6		3		1		21
Total	$	863	$	108	$	25	$	11	$	1,007	$	860	$	110	$	28	$	10	$	1,008

The balance of the equipment installment plan receivables as of December 31, 2020 on a gross basis by year of origination were as follows:

	2018		2019		2020		Total
(Dollars in millions)
Lowest Risk	$	42	$	270	$	551	$	863
Lower Risk	3		28		77		108
Slight Risk	1		6		18		25
Higher Risk	—		2		9		11
Total	$	46	$	306	$	655	$	1,007

Equipment installment plans allowance for credit losses

Activity for the years ended December 31, 2020 and December 31, 2019, in the allowance for credit losses for equipment installment plan receivables was as follows:

	2020		2019
(Dollars in millions)
Allowance for credit losses, beginning of year	$	84	$	77
Bad debts expense	50		82
Write-offs, net of recoveries	(56)		(75)
Allowance for credit losses, end of year	$	78	$	84

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income taxes receivable (payable)

TDS’ current income taxes balances at December 31, 2020 and 2019, were as follows:

December 31,	2020		2019
(Dollars in millions)
Federal income taxes receivable	$	180	$	31
Net state income taxes receivable	7		5

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Current
Federal	$	(175)	$	15	$	10
State	4		15		3
Deferred
Federal	179		36		24
State	11		(2)		9
Total income tax expense (benefit)	$	19	$	64	$	46

Income tax reconciliation

A reconciliation of TDS’ income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax rate to TDS’ effective income tax rate is as follows:

Year Ended December 31,	2020				2019				2018
	Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate	$	60	21.0	%	$	44	21.0	%	$	46	21.0	%
State income taxes, net of federal benefit1	11		4.0		12		5.5		11		4.9
Federal income tax rate change2	—		—		—		—		(16)		(7.1)
Change in federal valuation allowance3	—		—		7		3.1		(1)		(0.3)
Loss carryback benefit of CARES Act4	(60)		(21.0)		—		—		—		—
Nondeductible compensation	9		3.0		4		1.9		9		4.1
Tax credits	(2)		(0.6)		(4)		(1.9)		(1)		(0.6)
Other differences, net	1		—		1		0.7		(2)		(1.0)
Total income tax expense (benefit) and rate	$	19	6.4	%	$	64	30.3	%	$	46	21.0	%

1State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to state valuation allowances. 

2The Tax Act reduced the federal income tax rate from 35% to 21% for years after 2017, resulting in a tax benefit in 2018 due primarily to an income tax accounting method change that accelerated tax depreciation on certain assets for the 2017 tax year, pursuant to FASB Accounting Standards Update 2018-05, Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

3Change in federal valuation allowance in 2019 is due primarily to interest expense carryforwards not expected to be realized. The 2018 change also includes interest expense carryforwards not expected to be realized, offset by a change in judgment related to net operating loss carryforwards that became realizable due to an internal restructuring.

4The CARES Act provides a 5-year carryback of net operating losses generated in years 2018-2020. As the statutory federal tax rate applicable to certain years within the carryback period is 35%, carryback to those years provides a tax benefit in excess of the current federal statutory rate of 21%.

Deferred income tax assets and liabilities

Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:

December 31,	2020		2019
(Dollars in millions)
Deferred tax assets
Net operating loss (NOL) carryforwards	$	183	$	168
Lease liabilities	257		251
Asset retirement obligation	81		74
Other	109		106
Total deferred tax assets	630		599
Less valuation allowance	(158)		(152)
Net deferred tax assets	472		447
Deferred tax liabilities
Property, plant and equipment	652		481
Licenses/intangibles	287		261
Partnership investments	144		132
Lease assets	235		226
Other	17		22
Total deferred tax liabilities	1,335		1,122
Net deferred income tax liability	$	863	$	675

Deferred tax valuation allowance

A summary of TDS' deferred tax asset valuation allowance is as follows:

	2020		2019		2018
(Dollars in millions)
Balance at beginning of year	$	152	$	135	$	147
Charged to Income tax expense	6		17		(5)
Charged to Retained earnings	—		—		(7)
Balance at end of year	$	158	$	152	$	135

Income tax unrecognized benefits summary

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2020		2019		2018
(Dollars in millions)
Unrecognized tax benefits balance at beginning of year	$	49	$	49	$	46
Additions for tax positions of current year	8		8		8
Additions for tax positions of prior years	3		—		2
Reductions for tax positions of prior years	(1)		(7)		(1)
Reductions for settlements of tax positions	—		(1)		—
Reductions for lapses in statutes of limitations	(5)		—		(6)
Unrecognized tax benefits balance at end of year	$	54	$	49	$	49

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings per share

The amounts used in computing basic and diluted earnings per share attributable to TDS shareholders were as follows:

Year Ended December 31,	2020		2019		2018
(Dollars and shares in millions, except per share amounts)
Net income attributable to TDS shareholders used in basic earnings per share	$	226	$	121	$	135
Adjustments to compute diluted earnings:
Noncontrolling interest adjustment	(3)		(1)		(2)
Net income attributable to TDS shareholders used in diluted earnings per share	$	223	$	120	$	133
Weighted average number of shares used in basic earnings per share:
Common Shares	107		107		105
Series A Common Shares	7		7		7
Total	114		114		112
Effects of dilutive securities	1		2		2
Weighted average number of shares used in diluted earnings per share	115		116		114
Basic earnings per share attributable to TDS shareholders	$	1.97	$	1.06	$	1.20
Diluted earnings per share attributable to TDS shareholders	$	1.93	$	1.03	$	1.17

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Licenses

Activity related to TDS' Licenses is presented below.

	UScellular		Wireline		Cable		Total
(Dollars in millions)
Balance at December 31, 2018	$	2,190	$	2	$	3	$	2,195
Acquisitions	267		—		—		267
Divestitures	(10)		—		—		(10)
Exchanges - Licenses received	26		—		—		26
Capitalized interest	2		—		—		2
Balance at December 31, 2019	2,475		2		3		2,480
Acquisitions	171		—		—		171
Divestitures	(18)		—		—		(18)
Capitalized interest	5		—		—		5
Balance at December 31, 2020	$	2,633	$	2	$	3	$	2,638

Schedule of Goodwill

Activity related to TDS' Goodwill is presented below.

	Wireline1		Cable		Total
(Dollars in millions)
Balance at December 31, 2018	$	409	$	100	$	509
Acquisitions	—		38		38
Balance at December 31, 2019	409		138		547
Acquisitions	—		—		—
Balance at December 31, 2020	$	409	$	138	$	547

1Accumulated impairment losses in prior periods were $29 million for Wireline.

Schedule of Other intangible Assets

Activity related to TDS' Other intangible assets is presented below.

	December 31, 2020						December 31, 2019
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
(Dollars in millions)
Franchise rights	$	255	$	(51)	$	204	$	255	$	(34)	$	221
Customer lists and Trade name1	29		(20)		9		49		(31)		18
Total	$	284	$	(71)	$	213	$	304	$	(65)	$	239

1The Customer lists and Trade name balances at December 31, 2019 differ from the amounts reported in Note 8 – Intangible Assets of the 2019 Form 10-K, as the previously reported amounts included certain intangible assets that were fully amortized and had a net book value of zero.

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Investments in Unconsolidated Entities (Tables)

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity and measurement alternative method investments

TDS' Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.

December 31,	2020		2019
(Dollars in millions)
Equity method investments:
Capital contributions, loans, advances and adjustments	$	115	$	116
Cumulative share of income	2,278		2,099
Cumulative share of distributions	(1,937)		(1,748)
Total equity method investments	456		467
Measurement alternative method investments	21		21
Total investments in unconsolidated entities	$	477	$	488

The following tables, which are based on unaudited information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of TDS’ equity method investments:

December 31,	2020		2019
(Dollars in millions)
Assets
Current	$	1,232	$	1,516
Noncurrent	5,908		5,776
Total assets	$	7,140	$	7,292
Liabilities and Equity
Current liabilities	$	646	$	626
Noncurrent liabilities	1,124		1,132
Partners’ capital and shareholders’ equity	5,370		5,534
Total liabilities and equity	$	7,140	$	7,292

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Results of Operations
Revenues	$	6,702	$	6,929	$	6,801
Operating expenses	4,753		5,043		4,985
Operating income	1,949		1,886		1,816
Other income (expense), net	13		(24)		9
Net income	$	1,962	$	1,862	$	1,825

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property, plant and equipment

TDS’ Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2020 and 2019, were as follows:

December 31,	Useful Lives (Years)	2020		2019
(Dollars in millions)
Land	N/A	$	56	$	57
Buildings	5-40	533		527
Leasehold and land improvements	1-30	1,404		1,314
Cable and wire	15-40	2,195		1,996
Network and switching equipment	3-10	2,634		2,507
Cell site equipment	7-25	4,017		3,708
Office furniture and equipment	3-10	394		387
Other operating assets and equipment	1-12	189		174
System development	1-7	1,709		1,604
Work in process	N/A	528		590
Total property, plant and equipment, gross		13,659		12,864
Accumulated depreciation and amortization		(9,687)		(9,337)
Total property, plant and equipment, net		$	3,972	$	3,527

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Leases (Tables)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Components of lease expense

The following table shows the components of lease cost included in the Consolidated Statement of Operations:

Year Ended December 31,	2020		2019
(Dollars in millions)
Operating lease cost	$	184	$	177
Financing lease cost:
Amortization of ROU assets	2		2
Interest on lease liabilities	1		1
Variable lease cost	11		8
Total lease cost	$	198	$	188

Supplemental cash flow information related to leases

The following table shows supplemental cash flow information related to lease activities:

Year Ended December 31,	2020		2019
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	188	$	172
Operating cash flows from finance leases	1		1
ROU assets obtained in exchange for lease obligations:
Operating leases	$	157	$	132
Finance leases	—		10

Supplemental balance sheet information related to leases

The following table shows the classification of TDS’ finance leases in its Consolidated Balance Sheet:

December 31,	2020		2019
(Dollars in millions)
Finance Leases
Property, plant and equipment	$	20	$	20
Less: Accumulated depreciation and amortization	7		5
Property, plant and equipment, net	$	13	$	15
Current portion of long-term debt	—		1
Long-term debt, net	$	7	$	7
Total finance lease liabilities	$	7	$	8

Schedule of weighted average remaining lease term and weighted average discount rate related to leases

The table below shows a weighted-average analysis for lease terms and discount rates for all leases:

December 31,	2020		2019
Weighted Average Remaining Lease Term
Operating leases	12 years		12 years
Finance leases	25 years		24 years
Weighted Average Discount Rate
Operating leases	4.1	%	4.4	%
Finance leases	6.2	%	6.3	%

Maturities of lease liabilities

The maturities of lease liabilities are as follows:

	Operating Leases		Finance Leases
(Dollars in millions)
2021	$	169	$	—
2022	168		1
2023	151		1
2024	132		1
2025	100		—
Thereafter	708		15
Total lease payments1	$	1,428	$	18
Less: Imputed interest	359		11
Present value of lease liabilities	$	1,069	$	7

1    Lease payments exclude $54 million of legally binding lease payments for leases signed but not yet commenced.

Lease income

The following table shows the components of lease income which are included in Service revenues in the Consolidated Statement of Operations:

Year Ended December 31,	2020		2019
(Dollars in millions)
Operating lease income1	$	105	$	100

1During the third quarter of 2019, TDS recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the year ended December 31, 2019. TDS determined that this adjustment was not material to any of the periods impacted.

Maturities of expected lease revenues

The maturities of expected lease payments to be received are as follows:

	Operating Leases
(Dollars in millions)
2021	$	93
2022	77
2023	51
2024	35
2025	16
Thereafter	19
Total future lease maturities	$	291

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Asset Retirement Obligations (Tables)

12 Months Ended

Dec. 31, 2020

Asset Retirement Obligation [Abstract]

Asset retirement obligations

The results of the reviews (identified as Revisions in estimated cash outflows) and other changes in asset retirement obligations during 2020 and 2019, were as follows:

	2020		2019
(Dollars in millions)
Balance at beginning of year	$	342	$	307
Additional liabilities accrued	5		13
Revisions in estimated cash outflows	11		2
Acquisition of assets	—		1
Disposition of assets	(1)		(1)
Accretion expense	20		20
Balance at end of year	$	377	$	342

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Debt (Tables)

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Revolving credit facilities

The following table summarizes the revolving credit agreements as of December 31, 2020:

	TDS		UScellular
(Dollars in millions)
Maximum borrowing capacity	$	400	$	300
Letters of credit outstanding	$	1	$	2
Amount borrowed	$	—	$	—
Amount available for use	$	399	$	298

The following table summarizes the term loan credit agreements as of December 31, 2020:

	TDS		UScellular
(Dollars in millions)
Maximum borrowing capacity	$	200	$	300
Amount borrowed	$	125	$	83
Amount available for use	$	75	$	217

Long-term debt

Long-term debt as of December 31, 2020 and 2019, was as follows:

				December 31, 2020						December 31, 2019
	Issuance date	Maturity date	Call date (any time on or after)	Principal Amount		Less Unamortized discounts and debt issuance costs		Total		Principal Amount		Less Unamortized discount and debt issuance costs		Total
(Dollars in millions)
TDS Unsecured Senior Notes
6.625%	Mar 2005	Mar 2045	Mar 2010	$	116	$	3	$	113	$	116	$	3	$	113
6.875%	Nov 2010	Nov 2059	Nov 2015	225		7		218		225		7		218
7.000%	Mar 2011	Mar 2060	Mar 2016	300		9		291		300		9		291
5.875%	Dec 2012	Dec 2061	Dec 2017	195		7		188		195		7		188
UScellular Unsecured Senior Notes
6.700%	Dec 2003 and June 2004	Dec 2033	Dec 2003 and June 2004	$	544	$	13	$	531	$	544	$	13	$	531
6.950%	May 2011	May 2060	May 2016	342		11		331		342		11		331
7.250%	Dec 2014	Dec 2063	Dec 2019	275		10		265		275		10		265
7.250%	Nov 2015	Dec 2064	Dec 2020	300		10		290		300		10		290
6.250%	Aug 2020	Sep 2069	Sep 2025	500		17		483		—		—		—
5.500%	Dec 2020	Mar 2070	Mar 2026	500		17		483		—		—		—
UScellular Term Loan				83		3		80		83		1		82
TDS Term Loan				125		2		123		—		—		—
EIP Securitization				25		—		25		—		—		—
Finance lease obligations				7		—		7		8		—		8
Installment payment agreement				—		—		—		8		1		7
Other long-term notes				1		—		1		2		—		2
Total long-term debt				$	3,538	$	109	$	3,429	$	2,398	$	72	$	2,326
Long-term debt, current								$	5					$	10
Long-term debt, noncurrent								$	3,424					$	2,316

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Variable Interest Entities (Tables)

12 Months Ended

Dec. 31, 2020

Variable Interest Entities [Abstract]

Consolidated VIE assets and liabilities

The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in TDS’ Consolidated Balance Sheet.

December 31,	2020		2019
(Dollars in millions)
Assets
Cash and cash equivalents	$	18	$	19
Short-term investments	3		—
Accounts receivable	638		637
Inventory, net	3		5
Other current assets	21		7
Licenses	637		647
Property, plant and equipment, net	99		95
Operating lease right-of-use assets	37		42
Other assets and deferred charges	347		347
Total assets	$	1,803	$	1,799
Liabilities
Current liabilities	$	26	$	30
Long-term operating lease liabilities	34		39
Other deferred liabilities and credits	19		13
Total liabilities	$	79	$	82

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Noncontrolling Interests (Tables)

12 Months Ended

Dec. 31, 2020

Noncontrolling Interest [Abstract]

Noncontrolling interests

The following schedule discloses the effects of Net income attributable to TDS shareholders and changes in TDS’ ownership interest in UScellular on TDS’ equity:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Net income attributable to TDS shareholders	$	226	$	121	$	135
Transfers (to) from noncontrolling interests
Change in TDS’ Capital in excess of par value from UScellular's issuance of UScellular shares	(38)		(23)		(30)
Change in TDS’ Capital in excess of par value from UScellular’s repurchases of UScellular shares	14		6		—
Purchase of ownership in subsidiaries from noncontrolling interests	(9)		—		—
Net transfers (to) from noncontrolling interests	(33)		(17)		(30)
Net income attributable to TDS shareholders after transfers (to) from noncontrolling interests	$	193	$	104	$	105

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Common Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2020

Stockholders' Equity Note [Abstract]

Share issued

The following table summarizes the number of Common and Series A Common Shares issued.

	Common Shares	Series A Common Shares	Common Treasury Shares
(Shares in millions)
Balance at December 31, 2017	126	7	22
Dividend reinvestment, incentive and compensation plans	—	—	(3)
Balance at December 31, 2018	126	7	19
Dividend reinvestment, incentive and compensation plans	—	—	(1)
Balance at December 31, 2019	126	7	18
Repurchase of Common Shares	—	—	1
Balance at December 31, 2020	126	7	19

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Stock-based compensation

The following table summarizes stock-based compensation expense recognized during 2020, 2019 and 2018:

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Stock option awards	$	3	$	3	$	5
Restricted stock unit awards	30		33		30
Performance share unit awards	17		21		17
Deferred compensation bonus and matching stock unit awards	1		—		—
Awards under Non-Employee Director compensation plan	2		2		2
Total stock-based compensation, before income taxes	53		59		54
Income tax benefit	(13)		(15)		(14)
Total stock-based compensation expense, net of income taxes	$	40	$	44	$	40

Stock-based compensation, allocation by financial statement line item

The following table provides a summary of the classification of stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,	2020		2019		2018
(Dollars in millions)
Selling, general and administrative expense	$	48	$	54	$	49
Cost of services expense	5		5		5
Total stock-based compensation	$	53	$	59	$	54

Stock-based compensation, fair value assumptions

TDS estimated the fair value of stock options granted in 2020, 2019 and 2018 using the Black-Scholes valuation model and the assumptions shown in the table below:

	2020		2019		2018
Expected life	6.2 years		6.2 years		6.3 years
Expected annual volatility rate	35.0	%	29.0	%	28.6	%
Dividend yield	3.6	%	2.1	%	2.5	%
Risk-free interest rate	0.5	%	2.4	%	2.9	%

Summary of stock options

A summary of TDS stock options (total and portion exercisable) and changes during 2020 is presented in the tables and narrative below.

Common Share Options	Number of Options	Weighted Average Exercise Prices		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2019	4,091,000	$	26.63
Granted	387,000	$	19.15
Forfeited	(4,000)	$	26.64
Expired	(188,000)	$	26.90
Outstanding at December 31, 2020	4,286,000	$	25.94	$	—	4.7
(3,176,000 exercisable)		$	26.50	$	—	3.4

Summary of nonvested restricted stock units

A summary of TDS nonvested restricted stock units and changes during 2020 is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,233,000	$	26.16
Granted	661,000	$	17.19
Vested	(377,000)	$	25.99
Forfeited	(21,000)	$	24.89
Nonvested at December 31, 2020	1,496,000	$	22.26

A summary of UScellular nonvested restricted stock units and changes during 2020 is presented in the table below:

Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,461,000	$	40.90
Granted	1,020,000	$	29.18
Vested	(653,000)	$	35.54
Forfeited	(168,000)	$	34.81
Nonvested at December 31, 2020	1,660,000	$	36.43

Summary of nonvested performance share units

A summary of TDS nonvested performance share units and changes during 2020 is presented in the table below:

Common Performance Share Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	489,000	$	28.53
Granted	521,000	$	19.15
Vested	(63,000)	$	27.79
Change in units based on approved performance factors	4,000	$	27.79
Forfeited	(55,000)	$	27.83
Accumulated dividend equivalents	28,000	$	23.91
Nonvested at December 31, 2020	924,000	$	23.18

A summary of UScellular’s nonvested performance share units and changes during 2020 is presented in the table below:

Common Performance Share Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019	1,245,000	$	40.16
Granted	582,000	$	29.71
Vested	(398,000)	$	36.92
Change in units based on approved performance factors	20,000	$	46.43
Forfeited	(144,000)	$	40.05
Nonvested at December 31, 2020	1,305,000	$	36.60

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Business Segment Information (Tables)

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Business segment information

Financial data for TDS’ reportable segments for 2020, 2019 and 2018, is as follows. See Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements for additional information.

			TDS Telecom
Year ended or as of December 31, 2020	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	3,067	$	684	$	292	$	975	$	94	$	4,136
Equipment and product sales	970		1		—		1		118		1,089
Total operating revenues	4,037		685		292		976		212		5,225
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	782		269		123		392		70		1,244
Cost of equipment and products	1,011		1		—		1		98		1,110
Selling, general and administrative	1,368		199		72		270		43		1,681
Depreciation, amortization and accretion	683		124		78		203		23		909
(Gain) loss on asset disposals, net	25		—		1		1		1		27
(Gain) loss on license sales and exchanges, net	(5)		—		—		—		—		(5)
Operating income (loss)	173		92		18		110		(24)		259
Equity in earnings of unconsolidated entities	179		—		—		—		2		181
Interest and dividend income	8		4		1		5		2		15
Gain (loss) on investments	2		—		—		—		—		2
Interest expense	(112)		4		—		4		(60)		(168)
Other, net	—		(1)		—		(1)		—		(1)
Income (loss) before income taxes	250		99		18		117		(79)		288
Income tax expense (benefit)2	17						18		(16)		19
Net income (loss)	233						100		(64)		269
Add back:
Depreciation, amortization and accretion	683		124		78		203		23		909
(Gain) loss on asset disposals, net	25		—		1		1		1		27
(Gain) loss on license sales and exchanges, net	(5)		—		—		—		—		(5)
Gain (loss) on investments	(2)		—		—		—		—		(2)
Interest expense	112		(4)		—		(4)		60		168
Income tax expense (benefit)2	17						18		(16)		19
Adjusted EBITDA3	$	1,063	$	220	$	97	$	317	$	5	$	1,385
Investments in unconsolidated entities	$	435	$	4	$	—	$	4	$	38	$	477
Total assets	$	9,681	$	1,641	$	730	$	2,359	$	485	$	12,525
Capital expenditures	$	940	$	293	$	75	$	368	$	9	$	1,317

			TDS Telecom
Year Ended or as of December 31, 2019	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	3,035	$	682	$	247	$	928	$	96	$	4,059
Equipment and product sales	987		1		—		1		129		1,117
Total operating revenues	4,022		683		247		930		224		5,176
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	756		263		105		368		78		1,202
Cost of equipment and products	1,028		1		—		1		106		1,135
Selling, general and administrative	1,406		199		62		260		51		1,717
Depreciation, amortization and accretion	702		132		68		200		30		932
(Gain) loss on asset disposals, net	19		(8)		1		(7)		—		12
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		—		(1)
Operating income (loss)	112		96		11		107		(40)		179
Equity in earnings of unconsolidated entities	166		—		—		—		2		168
Interest and dividend income	17		10		2		12		—		29
Interest expense	(110)		3		—		3		(58)		(165)
Income (loss) before income taxes	185		110		13		122		(96)		211
Income tax expense (benefit)2	52						30		(18)		64
Net income (loss)	133						92		(78)		147
Add back:
Depreciation, amortization and accretion	702		132		68		200		30		932
(Gain) loss on asset disposals, net	19		(8)		1		(7)		—		12
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		—		(1)
Interest expense	110		(3)		—		(3)		58		165
Income tax expense (benefit)2	52						30		(18)		64
Adjusted EBITDA3	$	1,015	$	231	$	82	$	313	$	(9)	$	1,319
Investments in unconsolidated entities	$	447	$	4	$	—	$	4	$	37	$	488
Total assets4	$	8,164	$	1,471	$	734	$	2,196	$	421	$	10,781
Capital expenditures	$	710	$	243	$	73	$	316	$	6	$	1,032

			TDS Telecom
Year Ended or as of December 31, 2018	UScellular		Wireline		Cable		TDS Telecom Total1		Corporate, Eliminations and Other		Total
(Dollars in millions)
Operating revenues
Service	$	2,978	$	697	$	230	$	925	$	96	$	3,999
Equipment and product sales	989		2		—		2		119		1,110
Total operating revenues	3,967		699		230		927		215		5,109
Cost of services (excluding Depreciation, amortization and accretion expense reported below)	758		266		104		369		79		1,206
Cost of equipment and products	1,031		1		—		1		98		1,130
Selling, general and administrative	1,388		197		57		254		52		1,694
Depreciation, amortization and accretion	640		142		69		212		31		883
(Gain) loss on asset disposals, net	10		(3)		1		(2)		1		9
(Gain) loss on license sales and exchanges, net	(18)		—		—		—		—		(18)
Operating income (loss)	158		95		(2)		93		(46)		205
Equity in earnings of unconsolidated entities	159		—		—		—		1		160
Interest and dividend income	15		7		1		8		3		26
Interest expense	(116)		2		—		2		(58)		(172)
Other, net	(1)		3		—		2		1		2
Income (loss) before income taxes	215		106		(1)		105		(99)		221
Income tax expense (benefit)2	51						16		(21)		46
Net income (loss)	164						89		(78)		175
Add back:
Depreciation, amortization and accretion	640		142		69		212		31		883
(Gain) loss on asset disposals, net	10		(3)		1		(2)		1		9
(Gain) loss on license sales and exchanges, net	(18)		—		—		—		—		(18)
Interest expense	116		(2)		—		(2)		58		172
Income tax expense (benefit)2	51						16		(21)		46
Adjusted EBITDA3	$	963	$	243	$	70	$	313	$	(9)	$	1,267
Investments in unconsolidated entities	$	441	$	4	$	—	$	4	$	35	$	480
Total assets	$	7,274	$	1,304	$	639	$	1,934	$	575	$	9,783
Capital expenditures	$	515	$	176	$	56	$	232	$	20	$	767

Numbers may not foot due to rounding.

1TDS Telecom Total includes eliminations between the Wireline and Cable segments.

2Income tax expense (benefit) is not provided at the individual segment level for Wireline and Cable. TDS calculates income tax expense for “TDS Telecom Total”.

3Adjusted earnings before interest, taxes, depreciation, amortization and accretion (Adjusted EBITDA) is a segment measure reported to the chief operating decision maker for purposes of assessing their performance. Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation above. TDS believes Adjusted EBITDA is a useful measure of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. 

4As of January 1, 2019, UScellular adopted ASC 842 using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2019 includes the impacts of ASC 842, but prior periods remain as previously reported. See Note 10 — Leases for additional information.

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Supplemental Cash Flow Disclosures (Tables)

12 Months Ended

Dec. 31, 2020

Supplemental Cash Flow Information [Abstract]

Supplemental cash flow disclosures

Following are supplemental cash flow disclosures regarding interest paid and income taxes paid.

Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Interest paid	$	160	$	162	$	168
Income taxes paid, net of refunds received	(23)		44		40

Stock-based compensation supplemental cash flows

Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, TDS and UScellular withhold shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. TDS and UScellular then pay the amount of the required tax withholdings to the taxing authorities in cash.

TDS:
Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Common Shares withheld	153,000		814,000		676,000
Aggregate value of Common Shares withheld	$	3	$	29	$	21
Cash receipts upon exercise of stock options	—		2		48
Cash disbursements for payment of taxes	(3)		(8)		(6)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(3)	$	(6)	$	42

UScellular:
Year Ended December 31,	2020		2019		2018
(Dollars in millions)
Common Shares withheld	376,000		452,000		1,550,000
Aggregate value of Common Shares withheld	$	11	$	23	$	73
Cash receipts upon exercise of stock options	—		1		29
Cash disbursements for payment of taxes	(11)		(10)		(11)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(11)	$	(9)	$	18

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Narrative (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) asset_group unit reporting_unit	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Basis of presentation
Number of wireless connections	5,000,000
Wireline and Cable connections	1,200,000
FCC licenses, number of accounting units | unit	8
FCC licenses, number of accounting units, built licenses | unit	1
FCC licenses, number of accounting units, unbuilt licenses | unit	7
Advertising costs	$ 213,000,000	$ 227,000,000	$ 230,000,000
Amortization of implementation costs	11,000,000
UScellular
Basis of presentation
Agent liability	$ 55,000,000	59,000,000
TDS Telecom
Basis of presentation
Number of reporting units | reporting_unit	2
Asset groups | asset_group	2
Wireline
Basis of presentation
Loss on impairment of goodwill	$ 0	0
Cable
Basis of presentation
Loss on impairment of goodwill	$ 0	0
UScellular
Basis of presentation
Asset groups | asset_group	1
TDS Telecom | Franchise rights
Basis of presentation
Renewal period	10 years
Licenses
Basis of presentation
Renewal period	12 years
Licenses | UScellular
Basis of presentation
Impairment of intangible assets	$ 0	$ 0
Minimum
Basis of presentation
Amortization period	3 years
Minimum | Leasehold Improvements
Basis of presentation
Useful life	1 year
Minimum | Licenses
Basis of presentation
Renewal period	10 years
Maximum
Basis of presentation
Amortization period	5 years
Maximum | Leasehold Improvements
Basis of presentation
Useful life	30 years
Maximum | Licenses
Basis of presentation
Renewal period	15 years
UScellular
Basis of presentation
TDS ownership of UScellular	82.00%

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Cash and cash equivalents	$ 1,429	$ 465
Restricted cash included in Other current assets	23	9
Cash, cash equivalents and restricted cash in the statement of cash flows	$ 1,452	$ 474	$ 927	$ 622

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Cloud-Hosted Arrangements (Details) $ in Millions	Dec. 31, 2020 USD ($)
Accounting Policies [Abstract]
Implementation costs, gross	$ 69
Accumulated amortization	(13)
Implementation costs, net	$ 56

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Revenue Recognition - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities	$ 82	$ 78	$ 90
Capitalized contract cost
Amortization of contract cost assets	$ 120	$ 126	$ 124

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Revenue Recognition - Disaggregation Of Revenue (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	$ 5,120	$ 5,076	$ 5,019
Transferred over time
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	4,031	3,959	3,909
Transferred over time | Retail service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	2,686	2,650	2,623
Transferred over time | Inbound roaming
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	152	174	154
Transferred over time | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	594	533	509
Transferred over time | Commercial
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	198	209	226
Transferred over time | Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	181	185	191
Transferred over time | Other service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	220	208	206
Transferred at point in time | Equipment and product sales
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	1,089	1,117	1,110
UScellular
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	3,960	3,948	3,901
UScellular | Transferred over time
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	2,990	2,961	2,912
UScellular | Transferred over time | Retail service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	2,686	2,650	2,623
UScellular | Transferred over time | Inbound roaming
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	152	174	154
UScellular | Transferred over time | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
UScellular | Transferred over time | Commercial
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
UScellular | Transferred over time | Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
UScellular | Transferred over time | Other service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	152	137	135
UScellular | Transferred at point in time | Equipment and product sales
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	970	987	989
TDS Telecom
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	973	927	927
TDS Telecom | Transferred over time
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	972	926	925
TDS Telecom | Transferred over time | Retail service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom | Transferred over time | Inbound roaming
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom | Transferred over time | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	594	533	509
TDS Telecom | Transferred over time | Commercial
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	198	209	226
TDS Telecom | Transferred over time | Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	181	185	191
TDS Telecom | Transferred over time | Other service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	(1)	(1)	(1)
TDS Telecom | Transferred at point in time | Equipment and product sales
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	1	1	2
TDS Telecom Wireline
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	683	682	698
TDS Telecom Wireline | Transferred over time
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	683	681	696
TDS Telecom Wireline | Transferred over time | Retail service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Wireline | Transferred over time | Inbound roaming
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Wireline | Transferred over time | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	349	328	321
TDS Telecom Wireline | Transferred over time | Commercial
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	152	168	184
TDS Telecom Wireline | Transferred over time | Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	181	185	191
TDS Telecom Wireline | Transferred over time | Other service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Wireline | Transferred at point in time | Equipment and product sales
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	1	1	2
TDS Telecom Cable
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	290	246	230
TDS Telecom Cable | Transferred over time
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	290	246	230
TDS Telecom Cable | Transferred over time | Retail service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Cable | Transferred over time | Inbound roaming
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Cable | Transferred over time | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	245	205	188
TDS Telecom Cable | Transferred over time | Commercial
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	46	41	42
TDS Telecom Cable | Transferred over time | Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Cable | Transferred over time | Other service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
TDS Telecom Cable | Transferred at point in time | Equipment and product sales
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
Corporate, Eliminations and Other
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	187	201	191
Corporate, Eliminations and Other | Transferred over time
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	69	72	72
Corporate, Eliminations and Other | Transferred over time | Retail service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
Corporate, Eliminations and Other | Transferred over time | Inbound roaming
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
Corporate, Eliminations and Other | Transferred over time | Residential
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
Corporate, Eliminations and Other | Transferred over time | Commercial
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
Corporate, Eliminations and Other | Transferred over time | Wholesale
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	0	0	0
Corporate, Eliminations and Other | Transferred over time | Other service
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	69	72	72
Corporate, Eliminations and Other | Transferred at point in time | Equipment and product sales
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers	$ 118	$ 129	$ 119

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Revenue Recognition - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Contract assets	$ 13	$ 10
Contract liabilities	216	$ 197
Revenue recognized	$ 172

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Revenue Recognition - Performance Obligations (Details) $ in Millions	Dec. 31, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 695
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 377
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 160
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 158
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of remaining performance obligation, period

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Revenue Recognition - Contract Cost Assets (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Contract cost assets
Total contract cost assets	$ 149	$ 157
Sales commissions
Contract cost assets
Total contract cost assets	139	146
Installation costs
Contract cost assets
Total contract cost assets	$ 10	$ 11

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Fair Value Measurements (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Financial Instruments
Cash and cash equivalents	$ 1,429	$ 465
Short-term investments	3	0
Book Value
Financial Instruments
Cash and cash equivalents	1,429	465
Short-term investments	3	0
Book Value | Retail
Financial Instruments
Long-term debt	2,753	1,753
Book Value | Institutional
Financial Instruments
Long-term debt	535	534
Book Value | Other
Financial Instruments
Long-term debt	230	84
Fair Value | Level 1
Financial Instruments
Cash and cash equivalents	1,429	465
Short-term investments	3	0
Fair Value | Level 2 | Retail
Financial Instruments
Long-term debt	2,809	1,796
Fair Value | Level 2 | Institutional
Financial Instruments
Long-term debt	707	594
Fair Value | Level 2 | Other
Financial Instruments
Long-term debt	$ 230	$ 84
7.0% Senior Notes
Financial Instruments
Interest rate on debt	7.00%
6.875% Senior Notes
Financial Instruments
Interest rate on debt	6.875%
6.625% Senior Notes
Financial Instruments
Interest rate on debt	6.625%
5.875% Senior Notes
Financial Instruments
Interest rate on debt	5.875%
7.25% 2063 Senior Notes | UScellular
Financial Instruments
Interest rate on debt	7.25%
7.25% 2064 Senior Notes | UScellular
Financial Instruments
Interest rate on debt	7.25%
6.95% Senior Notes | UScellular
Financial Instruments
Interest rate on debt	6.95%
6.7% Senior Notes | UScellular
Financial Instruments
Interest rate on debt	6.70%
6.25% Senior Notes | UScellular
Financial Instruments
Interest rate on debt	6.25%
5.5% Senior Notes | UScellular
Financial Instruments
Interest rate on debt	5.50%
Interest rate | Institutional and Other | Minimum
Financial Instruments
Fair value assumption, interest rate	1.35%	3.55%
Interest rate | Institutional and Other | Maximum
Financial Instruments
Fair value assumption, interest rate	3.75%	6.25%

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Equipment Installment Plans - Narrative (Details)	Dec. 31, 2020
Receivables [Abstract]
Past due	30 days

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Equipment Installment Plans - EIP Receivables (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Equipment installment plan receivables, gross	$ 1,007	$ 1,008
Allowance for credit losses	(78)	(84)
Equipment installment plan receivables, net	929	924
Accounts receivable — Customers and agents (Current portion)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Equipment installment plan receivables, net	590	587
Other assets and deferred charges (Non-current portion)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Equipment installment plan receivables, net	$ 339	$ 337

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Equipment Installment Plans - Gross Receivables by Credit Category (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables, gross	$ 1,007	$ 1,008
2018	46
2019	306
2020	655
Unbilled
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	948	942
Billed
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	43	45
Equipment installment plan receivables, past due	16	21
Lowest Risk
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables, gross	863	860
2018	42
2019	270
2020	551
Lowest Risk | Unbilled
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	819	812
Lowest Risk | Billed
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	36	37
Equipment installment plan receivables, past due	8	11
Lower Risk
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables, gross	108	110
2018	3
2019	28
2020	77
Lower Risk | Unbilled
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	98	99
Lower Risk | Billed
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	5	5
Equipment installment plan receivables, past due	5	6
Slight Risk
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables, gross	25	28
2018	1
2019	6
2020	18
Slight Risk | Unbilled
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	22	23
Slight Risk | Billed
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	1	2
Equipment installment plan receivables, past due	2	3
Higher Risk
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables, gross	11	10
2018	0
2019	2
2020	9
Higher Risk | Unbilled
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	9	8
Higher Risk | Billed
Financing Receivable, Credit Quality Indicator [Line Items]
Equipment installment plan receivables	1	1
Equipment installment plan receivables, past due	$ 1	$ 1

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Equipment Installment Plans - Allowance for Credit Losses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Allowance for credit losses
Allowance for credit losses, beginning of year	$ 84
Allowance for credit losses, end of year	78	$ 84
Equipment Installment Plan Receivable
Allowance for credit losses
Allowance for credit losses, beginning of year	84	77
Bad debts expense	50	82
Write-offs, net of recoveries	(56)	(75)
Allowance for credit losses, end of year	$ 78	$ 84

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Income Taxes - Balances (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Income Tax [Line Items]
Income taxes receivable	$ 187	$ 36
Federal
Income Tax [Line Items]
Income taxes receivable	180	31
State
Income Tax [Line Items]
Income taxes receivable	$ 7	$ 5

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Income Taxes - Expense (Benefit) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Current
Current federal income tax expense (benefit)	$ (175)	$ 15	$ 10
Current state income tax expense	4	15	3
Deferred
Deferred federal income tax expense	179	36	24
Deferred state income tax expense (benefit)	11	(2)	9
Total income tax expense (benefit)	$ 19	$ 64	$ 46

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Other income tax disclosures
Effect of unrecognized tax benefit on income tax expense	$ 43	$ 39	$ 39
Interest expense and penalties related to unrecognized income tax expense	2	3
Net accrued interest and penalties	23	$ 21
State
Operating loss carryforwards
State NOL carryforwards	3,088
Deferred income tax asset for State NOL carryforwards	166
Federal
Operating loss carryforwards
Federal NOL carryforwards	80
Deferred income tax asset for Federal NOL carryforwards	$ 17
Maximum
Other income tax disclosures
Interest expense and penalties related to unrecognized income tax expense			$ 1

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Income Taxes - Expense Reconciliation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income tax expense reconciliation
Statutory federal income tax expense	$ 60	$ 44	$ 46
State income taxes, net of federal benefit	11	12	11
Federal income tax rate change	0	0	(16)
Change in federal valuation allowance	0	7	(1)
Loss carryback benefit of CARES Act	(60)	0	0
Nondeductible compensation	9	4	9
Tax credits	(2)	(4)	(1)
Other differences, net	1	1	(2)
Total income tax expense (benefit)	$ 19	$ 64	$ 46
Income tax rate reconciliation
Statutory federal income tax rate	21.00%	21.00%	21.00%	35.00%
State income taxes, net of federal benefit	4.00%	5.50%	4.90%
Federal income tax rate change	0.00%	0.00%	(7.10%)
Change in federal valuation allowance	0.00%	3.10%	(0.30%)
Loss carryback benefit of CARES Act	(21.00%)	0.00%	0.00%
Nondeductible compensation	3.00%	1.90%	4.10%
Tax credits	(0.60%)	(1.90%)	(0.60%)
Other differences, net	0.00%	0.70%	(1.00%)
Total income tax rate	6.40%	30.30%	21.00%

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Income Taxes - Components of Deferred Income Tax (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Deferred tax assets
Net operating loss (NOL) carryforwards	$ 183	$ 168
Lease liabilities	257	251
Asset retirement obligation	81	74
Other	109	106
Total deferred tax assets	630	599
Less valuation allowance	(158)	(152)
Net deferred tax assets	472	447
Deferred tax liabilities
Property, plant and equipment	652	481
Licenses/intangibles	287	261
Partnership investments	144	132
Lease assets	235	226
Other	17	22
Total deferred tax liabilities	1,335	1,122
Net deferred income tax liability	$ 863	$ 675

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Income Taxes - Deferred Tax Valuation Allowance (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Deferred tax valuation allowance, rollfoward
Balance at beginning of year	$ 152
Balance at end of year	158	$ 152
Deferred tax asset valuation allowance
Deferred tax valuation allowance, rollfoward
Balance at beginning of year	152	135	$ 147
Charged to Income tax expense	6	17	(5)
Charged to Retained earnings	0	0	(7)
Balance at end of year	$ 158	$ 152	$ 135

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Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Summary of unrecognized income tax benefits
Unrecognized tax benefits balance at beginning of year	$ 49	$ 49	$ 46
Additions for tax positions of current year	8	8	8
Additions for tax positions of prior years	3	0	2
Reductions for tax positions of prior years	(1)	(7)	(1)
Reductions for settlements of tax positions	0	(1)	0
Reductions for lapses in statutes of limitations	(5)	0	(6)
Unrecognized tax benefits balance at end of year	$ 54	$ 49	$ 49

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Earnings Per Share - Computation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Earnings per share
Net income attributable to TDS shareholders used in basic earnings per share	$ 226	$ 121	$ 135
Noncontrolling interest adjustment	(3)	(1)	(2)
Net income attributable to TDS shareholders used in diluted earnings per share	$ 223	$ 120	$ 133
Weighted average number of shares used in basic earnings per share (in shares)	114	114	112
Effects of dilutive securities (in shares)	1	2	2
Weighted average number of shares used in diluted earnings per share (in shares)	115	116	114
Basic earnings per share attributable to TDS shareholders (in dollars per share)	$ 1.97	$ 1.06	$ 1.20
Diluted earnings per share attributable to TDS shareholders (in dollars per share)	$ 1.93	$ 1.03	$ 1.17
Common Shares
Earnings per share
Weighted average number of shares used in basic earnings per share (in shares)	107	107	105
Series A Common Shares
Earnings per share
Weighted average number of shares used in basic earnings per share (in shares)	7		7

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Earnings Per Share - Narrative (Details) - shares shares in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Abstract]
Antidilutive securities (in shares)	5	2	3

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Intangible Assets - Schedules (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Goodwill
Balance, beginning of period		$ 547	$ 509
Acquisitions		0	38
Balance, end of period		547	547
Finite-Lived Intangible Assets
Gross Amount		284	304
Accumulated Amortization		(71)	(65)
Net Amount	[1]	213	239
Franchise rights
Finite-Lived Intangible Assets
Gross Amount		255	255
Accumulated Amortization		(51)	(34)
Net Amount		204	221
Customer lists and Trade name
Finite-Lived Intangible Assets
Gross Amount		29	49
Accumulated Amortization		(20)	(31)
Net Amount		9	18
Wireline
Schedule Of Indefinite Lived and Finite Lived Intangible Assets [Line Items]
Accumulated impairment losses in prior periods		29
Goodwill
Balance, beginning of period		409	409
Acquisitions		0	0
Balance, end of period		409	409
Cable
Goodwill
Balance, beginning of period		138	100
Acquisitions		0	38
Balance, end of period		138	138
Licenses
Licenses
Balance, beginning of period		2,480	2,195
Acquisitions		171	267
Divestitures		(18)	(10)
Exchanges - Licenses received			26
Capitalized interest		5	2
Balance, end of period		2,638	2,480
Licenses | Wireline
Licenses
Balance, beginning of period		2	2
Acquisitions		0	0
Divestitures		0	0
Exchanges - Licenses received			0
Capitalized interest		0	0
Balance, end of period		2	2
Licenses | Cable
Licenses
Balance, beginning of period		3	3
Acquisitions		0	0
Divestitures		0	0
Exchanges - Licenses received			0
Capitalized interest		0	0
Balance, end of period		3	3
Licenses | UScellular
Licenses
Balance, beginning of period		2,475	2,190
Acquisitions		171	267
Divestitures		(18)	(10)
Exchanges - Licenses received			26
Capitalized interest		5	2
Balance, end of period		$ 2,633	$ 2,475

[1] The accumulated amortization balance at December 31, 2019 differs from the amount reported in the Consolidated Balance Sheet of the 2019 Form 10-K, as the previously reported amount included certain intangible assets that were fully amortized and had a net book value of zero.

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Intangible Assets - Narrative (Details) $ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($) license	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Indefinite-lived Intangible Assets [Line Items]
Amortization expense for intangible assets	$ 26	$ 24	$ 26
Estimated amortization expense
2021	21
2022	20
2023	19
2024	17
2025	$ 17
Auction 103 | UScellular
Indefinite-lived Intangible Assets [Line Items]
Licenses won | license	237
Total winning bid	$ 146

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Investments in Unconsolidated Entities (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2020		Dec. 31, 2019		Dec. 31, 2018	Dec. 31, 2017
Equity Method Investments and Joint Ventures [Abstract]
Capital contributions, loans, advances and adjustments		$ 115		$ 116
Cumulative share of income		2,278		2,099
Cumulative share of distributions		(1,937)		(1,748)
Total equity method investments		456		467
Measurement alternative method investments		21		21
Total investments in unconsolidated entities		477		488		$ 480
Assets
Current		3,026		1,921
Total assets		12,525	[1]	10,781	[1]	9,783
Liabilities and Equity
Current liabilities		1,153		962
Partners’ capital and shareholders’ equity		5,593		5,404		5,293	$ 4,892
Total liabilities and equity	[1]	12,525		10,781
Results of Operations
Revenues		5,225		5,176		5,109
Operating expenses		4,966		4,997		4,904
Operating income		259		179		205
Net income		269		147		175
Equity Method Investments [Member]
Assets
Current		1,232		1,516
Noncurrent		5,908		5,776
Total assets		7,140		7,292
Liabilities and Equity
Current liabilities		646		626
Noncurrent liabilities		1,124		1,132
Partners’ capital and shareholders’ equity		5,370		5,534
Total liabilities and equity		7,140		7,292
Results of Operations
Revenues		6,702		6,929		6,801
Operating expenses		4,753		5,043		4,985
Operating income		1,949		1,886		1,816
Other income (expense), net		13		(24)		9
Net income		$ 1,962		$ 1,862		$ 1,825

[1] The consolidated total assets as of December 31, 2020 and 2019, include assets held by consolidated variable interest entities (VIEs) of $1,042 million and $915 million, respectively, which are not available to be used to settle the obligations of TDS. The consolidated total liabilities as of December 31, 2020 and 2019, include certain liabilities of consolidated VIEs of $18 million and $20 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of TDS. See Note 15 — Variable Interest Entities for additional information.

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Property, Plant and Equipment (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Land	$ 56	$ 57
Buildings	533	527
Leasehold and land improvements	1,404	1,314
Cable and wire	2,195	1,996
Network and switching equipment	2,634	2,507
Cell site equipment	4,017	3,708
Office furniture and equipment	394	387
Other operating assets and equipment	189	174
System development	1,709	1,604
Work in process	528	590
Total property, plant and equipment, gross	13,659	12,864
Accumulated depreciation and amortization	(9,687)	(9,337)
Property, plant and equipment, net	3,972	3,527
Depreciation and amortization expense	862	890	$ 839
(Gain) loss on asset disposals, net	$ 27	$ 12	$ 9
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Useful life	5 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Useful life	40 years
Leasehold and land improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful life	1 year
Leasehold and land improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful life	30 years
Cable and wire | Minimum
Property, Plant and Equipment [Line Items]
Useful life	15 years
Cable and wire | Maximum
Property, Plant and Equipment [Line Items]
Useful life	40 years
Network and switching equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Network and switching equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	10 years
Cell site equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	7 years
Cell site equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	25 years
Office furniture and equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Office furniture and equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	10 years
Other operating assets and equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	1 year
Other operating assets and equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	12 years
System development | Minimum
Property, Plant and Equipment [Line Items]
Useful life	1 year
System development | Maximum
Property, Plant and Equipment [Line Items]
Useful life	7 years

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Leases - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases
Retained earnings	$ 2,802	$ 2,672
ASC 842
Leases
Retained earnings				$ 2
ASC 842 | Retained earnings
Leases
Retained earnings				$ 2
Minimum | ASC 842 | Retained earnings
Leases
Retained earnings			$ 0

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Leases - Lease Cost (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Lease, Cost [Abstract]
Operating lease cost	$ 184	$ 177
Amortization of ROU assets	2	2
Interest on lease liabilities	1	1
Variable lease cost	11	8
Total lease cost	$ 198	$ 188

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 188	$ 172
Operating cash flows from finance leases	1	1
ROU assets obtained in exchange for lease obligations:
Operating leases	157	132
Finance leases	$ 0	$ 10

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Leases - Classification of Finance Leases (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Finance Leases
Property, plant and equipment	$ 13,659	$ 12,864
Less: Accumulated depreciation and amortization	9,687	9,337
Property, plant and equipment, net	3,972	3,527
Current portion of long-term debt	5	10
Long-term debt, net	3,424	2,316
Total finance lease liabilities	7
Finance leases
Finance Leases
Property, plant and equipment	20	20
Less: Accumulated depreciation and amortization	7	5
Property, plant and equipment, net	13	15
Current portion of long-term debt	0	1
Long-term debt, net	7	7
Total finance lease liabilities	$ 7	$ 8

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Leases - Lease Term and Discount Rate (Details)	Dec. 31, 2020	Dec. 31, 2019
Weighted Average Remaining Lease Term
Operating leases	12 years	12 years
Finance leases	25 years	24 years
Weighted Average Discount Rate
Operating leases	4.10%	4.40%
Finance leases	6.20%	6.30%

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Leases - Maturities of Lease Liabilities (Details) $ in Millions	Dec. 31, 2020 USD ($)
Operating Leases
2021	$ 169
2022	168
2023	151
2024	132
2025	100
Thereafter	708
Total lease payments	1,428
Less: Imputed interest	359
Present value of lease liabilities	1,069
Finance Leases
2021	0
2022	1
2023	1
2024	1
2025	0
Thereafter	15
Total lease payments	18
Less: Imputed interest	11
Present value of lease liabilities	7
Legally binding lease payments for leases signed but not yet commenced	$ 54

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Leases - Components of Lease Income (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Leases
Operating lease income	$ 105	$ 100
Tower leases out of period adjustment
Leases
Immaterial error correction		During the third quarter of 2019, TDS recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the year ended December 31, 2019. TDS determined that this adjustment was not material to any of the periods impacted.
Other service revenues | Tower leases out of period adjustment
Leases
Out-of-period adjustment		$ 5

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Leases - Maturities of Expected Lease Revenues (Details) $ in Millions	Dec. 31, 2020 USD ($)
Leases [Abstract]
2021	$ 93
2022	77
2023	51
2024	35
2025	16
Thereafter	19
Total future lease maturities	$ 291

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Asset Retirement Obligation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Asset retirement obligation
Balance at beginning of year	$ 342	$ 307
Additional liabilities accrued	5	13
Revisions in estimated cash outflows	11	2
Acquisition of assets	0	1
Disposition of assets	(1)	(1)
Accretion expense	20	20
Balance at end of year	$ 377	$ 342

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Debt - Revolving Credit Facilities (Details)	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
TDS Revolving credit facility
Revolving credit
Maximum borrowing capacity	$ 400,000,000
Letters of credit outstanding	1,000,000
Amount borrowed	0
Amount available for use	399,000,000
UScellular Revolving credit facility
Revolving credit
Maximum borrowing capacity	300,000,000
Letters of credit outstanding	2,000,000
Amount borrowed	0
Amount available for use	298,000,000
TDS and UScellular Revolving credit facility
Revolving credit
Unused commitment fees	$ 2,000,000	$ 2,000,000	$ 2,000,000
Consolidated interest coverage ratio	3.00
Consolidated leverage ratio	3.25
TDS and UScellular Revolving credit facility | LIBOR rate
Revolving credit
Contractual spread	1.50%
TDS and UScellular Revolving credit facility | Alternative Base Rate
Revolving credit
Contractual spread	0.50%
Subordination Agreement | UScellular | Maximum
Revolving credit
Consolidated funded indebtedness	$ 105,000,000
Refinancing indebtedness	250,000,000
Subordination Agreement | UScellular Revolving credit facility
Revolving credit
Consolidated funded indebtedness	0
Refinancing indebtedness	$ 0

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Debt - Term Loan Facilities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Sep. 30, 2021	Jun. 30, 2021	Jan. 04, 2021
UScellular Term loan facility
Long-term debt
Maximum borrowing capacity	$ 300,000,000
Amount borrowed	83,000,000
Amount available for use	217,000,000
TDS Term Loan Facility
Long-term debt
Maximum borrowing capacity	200,000,000
Amount borrowed	125,000,000
Amount available for use	$ 75,000,000
TDS Term Loan Facility | Subsequent event
Long-term debt
Amount borrowed				$ 75,000,000
Long-term Debt			$ 500,000
LIBOR rate | TDS Term Loan Facility
Long-term debt
Contractual spread	2.00%
UScellular | UScellular Term loan facility | Subsequent event
Long-term debt
Long-term Debt		$ 750,000
UScellular | LIBOR rate | UScellular Term loan facility
Long-term debt
Contractual spread	2.25%
Subordination Agreement | UScellular Term loan facility | UScellular
Long-term debt
Consolidated funded indebtedness	$ 0
Refinancing indebtedness	$ 0

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Debt - Receivables Securitization Agreement (Details) - UScellular - Receivables securitization facility - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Apr. 02, 2020
Debt Instrument [Line Items]
Amounts borrowed	$ 25,000,000			$ 125,000,000
Maximum borrowing capacity	300,000,000
Repayment of debt	100,000,000
Amount available for use	275,000,000
Assets available to be pledged	205,000,000
Unused commitment fees	$ 1,000,000	$ 1,000,000	$ 1,000,000

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Debt - Long-Term Debt (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Long-term debt
Principal amount	$ 3,538	$ 2,398
Unamortized discount and debt issuance costs	109	72
Total long term debt	3,429	2,326
Current portion of long-term debt	5	10
Long-term debt, net	3,424	2,316
Long-term debt maturities
Scheduled principal payments 2021	5
Scheduled principal payments 2022	30
Scheduled principal payments 2023	5
Scheduled principal payments 2024	5
Scheduled principal payments 2025	$ 5
6.25% Senior Notes | UScellular
Long-term debt
Interest rate on debt	6.25%
Principal amount	$ 500	0
Debt issuance costs	17
Long-term debt	483	0
Unamortized discount and debt issuance costs	$ 17	0
5.5% Senior Notes | UScellular
Long-term debt
Interest rate on debt	5.50%
Principal amount	$ 500	0
Debt issuance costs	17
Long-term debt	483	0
Unamortized discount and debt issuance costs	$ 17	0
6.625% Senior Notes
Long-term debt
Interest rate on debt	6.625%
6.625% Senior Notes | TDS Parent Company
Long-term debt
Interest rate on debt	6.625%
Principal amount	$ 116	116
Long-term debt	113	113
Unamortized discount and debt issuance costs	$ 3	3
6.875% Senior Notes
Long-term debt
Interest rate on debt	6.875%
6.875% Senior Notes | TDS Parent Company
Long-term debt
Interest rate on debt	6.875%
Principal amount	$ 225	225
Long-term debt	218	218
Unamortized discount and debt issuance costs	$ 7	7
7.0% Senior Notes
Long-term debt
Interest rate on debt	7.00%
7.0% Senior Notes | TDS Parent Company
Long-term debt
Interest rate on debt	7.00%
Principal amount	$ 300	300
Long-term debt	291	291
Unamortized discount and debt issuance costs	$ 9	9
5.875% Senior Notes
Long-term debt
Interest rate on debt	5.875%
5.875% Senior Notes | TDS Parent Company
Long-term debt
Interest rate on debt	5.875%
Principal amount	$ 195	195
Long-term debt	188	188
Unamortized discount and debt issuance costs	$ 7	7
6.7% Senior Notes | UScellular
Long-term debt
Interest rate on debt	6.70%
Principal amount	$ 544	544
Long-term debt	531	531
Unamortized discount and debt issuance costs	$ 13	13
Redemption price, percentage	100.00%
6.7% Senior Notes | Treasury Rate | UScellular
Long-term debt
Interest rate on debt	0.30%
6.95% Senior Notes | UScellular
Long-term debt
Interest rate on debt	6.95%
Principal amount	$ 342	342
Long-term debt	331	331
Unamortized discount and debt issuance costs	$ 11	11
7.25% Senior Notes due 2063 | UScellular
Long-term debt
Interest rate on debt	7.25%
Principal amount	$ 275	275
Long-term debt	265	265
Unamortized discount and debt issuance costs	$ 10	10
7.25% Senior Notes due 2064 | UScellular
Long-term debt
Interest rate on debt	7.25%
Principal amount	$ 300	300
Long-term debt	290	290
Unamortized discount and debt issuance costs	$ 10	10
Callable Notes
Long-term debt
Redemption price, percentage	100.00%
UScellular Term loan facility | UScellular
Long-term debt
Principal amount	$ 83	83
Long-term debt	80	82
Unamortized discount and debt issuance costs	3	1
Finance lease obligations
Long-term debt
Principal amount	7	8
Unamortized discount and debt issuance costs	0	0
Finance lease obligations	7	8
Installment payment agreement
Long-term debt
Principal amount	0	8
Long-term debt	0	7
Unamortized discount and debt issuance costs	0	1
Other long-term notes
Long-term debt
Principal amount	1	2
Long-term debt	1	2
Unamortized discount and debt issuance costs	0	0
TDS Term Loan Facility
Long-term debt
Principal amount	125	0
Long-term debt	123	0
Unamortized discount and debt issuance costs	2	0
Receivables Securitization Facility [Member] | UScellular
Long-term debt
Principal amount	25	0
Long-term debt	25	0
Unamortized discount and debt issuance costs	$ 0	$ 0

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Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Defined Contribution Plan Disclosure [Line Items]
Fair value of plan assets at end of year	$ 69	$ 63
Benefit obligation at end of year	57	55
Funded status	12	8
Pension
Defined Contribution Plan Disclosure [Line Items]
Defined contribution cost	16	17	$ 16
Retirement Savings (401(k) Plan)
Defined Contribution Plan Disclosure [Line Items]
Defined contribution cost	$ 27	$ 25	$ 28

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Commitments and Contingencies (Details) - USD ($) $ in Millions	Feb. 18, 2021	Dec. 31, 2020	Dec. 31, 2019
Loss Contingency, Estimate [Abstract]
Accrual for legal proceedings and unasserted claims			$ 2
Maximum
Loss Contingency, Estimate [Abstract]
Accrual for legal proceedings and unasserted claims		$ 1
UScellular
Loss Contingency, Estimate [Abstract]
FCC License Auction, Percent of Bid Credit in Each Auction		25.00%
Subsequent event
Loss Contingency, Estimate [Abstract]
Commitment to purchase wireless spectrum licenses	$ 1,460

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Variable Interest Entities - Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Dec. 31, 2020		Dec. 31, 2019		Dec. 31, 2018
Assets
Cash and cash equivalents	$ 1,429		$ 465
Short-term investments	3		0
Accounts receivable	1,004		1,005
Inventory, net	154		169
Other current assets	36		29
Licenses	2,638		2,480
Property, plant and equipment, net	3,972		3,527
Operating lease right-of-use assets	998		972
Other assets and deferred charges	652		607
Total assets	12,525	[1]	10,781	[1]	$ 9,783
Liabilities
Current liabilities	1,153		962
Long-term operating lease liabilities	940		931
Other deferred liabilities and credits	541		481
Consolidated Variable Interest Entities
Assets
Cash and cash equivalents	18		19
Short-term investments	3		0
Accounts receivable	638		637
Inventory, net	3		5
Other current assets	21		7
Licenses	637		647
Property, plant and equipment, net	99		95
Operating lease right-of-use assets	37		42
Other assets and deferred charges	347		347
Total assets	1,803		1,799
Liabilities
Current liabilities	26		30
Long-term operating lease liabilities	34		39
Other deferred liabilities and credits	19		13
Total liabilities	$ 79		$ 82

[1] The consolidated total assets as of December 31, 2020 and 2019, include assets held by consolidated variable interest entities (VIEs) of $1,042 million and $915 million, respectively, which are not available to be used to settle the obligations of TDS. The consolidated total liabilities as of December 31, 2020 and 2019, include certain liabilities of consolidated VIEs of $18 million and $20 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of TDS. See Note 15 — Variable Interest Entities for additional information.

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Variable Interest Entities - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Variable Interest Entities, Other Disclosures
Investment in unconsolidated entities, maximum exposure	$ 5	$ 5
Capital contributions, loans or advances	111	255	$ 152
USCC EIP LLC
Variable Interest Entities, Other Disclosures
Capital contributions, loans or advances	$ 83	$ 214	$ 116
King Street Wireless out-of-period adjustment
Variable Interest Entities, Other Disclosures
Immaterial error correction			During the first quarter of 2018, TDS recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $6 million and decreasing Net income attributable to TDS shareholders by $6 million in 2018. TDS determined that this adjustment was not material to any of the periods impacted.
Net income attributable to noncontrolling interests, net of tax | King Street Wireless out-of-period adjustment
Variable Interest Entities, Other Disclosures
Out-of-period adjustment			$ 6
Net income attributable to TDS shareholders | King Street Wireless out-of-period adjustment
Variable Interest Entities, Other Disclosures
Out-of-period adjustment			$ (6)

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Noncontrolling Interests (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Noncontrolling Interest [Abstract]
Net income attributable to TDS shareholders	$ 226	$ 121	$ 135
Transfer (to) from the noncontrolling interests
Change in TDS’ Capital in excess of par value from UScellular's issuance of UScellular shares	(38)	(23)	(30)
Change in TDS’ Capital in excess of par value from UScellular’s repurchases of UScellular shares	14	6	0
Purchase of ownership in subsidiaries from noncontrolling interests	(9)	0	0
Net transfers (to) from noncontrolling interests	(33)	(17)	(30)
Net income attributable to TDS shareholders after transfers (to) from noncontrolling interests	193	$ 104	$ 105
Redeemable noncontrolling interest
Settlement value of mandatorily redeemable noncontrolling interests	20
Carrying value of mandatorily redeemable noncontrolling interests	$ 6

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Common Shareholders' Equity - Narrative (Details)		1 Months Ended
	Jan. 01, 2017 shares	Nov. 30, 2009 shares	Dec. 31, 2020 USD ($) director vote shares	Aug. 02, 2013 USD ($)
Series A Common Shares
Common shareholders' equity, other disclosures
Number of votes | vote			10
Number of directors entitled to elect shares | director			8
Common Shares
Common shareholders' equity, other disclosures
Number of votes | vote			1
Number of directors entitled to elect shares | director			4
Share repurchases
Repurchase authorization | $				$ 250,000,000
Repurchase authorization, maximum dollar value | $			$ 185,000,000
Common Shares | Share Conversion
Common shareholders' equity, other disclosures
Shares reserved (in shares)			7,284,000
Common Shares | Tax-Deferred Savings Plan
Common shareholders' equity, other disclosures
Shares reserved (in shares)			90,000
UScellular Common Shares | UScellular
Share repurchases
Repurchase authorization, additional number of shares per year (in shares)		1,300,000
Repurchase authorization, cumulative shares authorized (in shares)			4,507,000
UScellular Common Shares | UScellular | Maximum
Share repurchases
Repurchase authorization, additional number of shares per year (in shares)	1,300,000
UScellular Common Shares | UScellular | Minimum
Share repurchases
Repurchase authorization, additional number of shares per year (in shares)	0

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Common Shareholders' Equity - Equity Rollforward (Details) - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Common shareholders' equity, share rollforward
Common stock, shares issued beginning balance (in shares)	133
Repurchase of Common Shares	$ (14)
Common stock, shares issued ending balance (in shares)	133	133
Common Shares
Common shareholders' equity, share rollforward
Common stock, shares issued beginning balance (in shares)	126	126	126
Dividend reinvestment, incentive and compensation plans		0	0
Repurchase of Common Shares	$ 0
Common stock, shares issued ending balance (in shares)	126	126	126
Treasury shares, share rollforward
Treasury shares, beginning balance (in shares)	18	19	22
Dividend reinvestment, incentive and compensation plans - Treasury shares		(1)	(3)
Repurchase of Common Shares	1
Treasury shares, ending balance (in shares)	19	18	19
Series A Common Shares
Common shareholders' equity, share rollforward
Common stock, shares issued beginning balance (in shares)	7	7	7
Dividend reinvestment, incentive and compensation plans		0	0
Repurchase of Common Shares	$ 0
Common stock, shares issued ending balance (in shares)	7	7	7

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Stock-Based Compensation - TDS Consolidated (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Stock based compensation
Stock-based compensation expense	$ 53	$ 59	$ 54
Income tax benefit	(13)	(15)	(14)
Total stock-based compensation expense, net of income taxes	40	44	40
Unrecognized compensation cost for all stock-based compensation awards	$ 55
Weighted average period for recognition of unrecognized compensation cost for all stock-based compensation awards	2 years
Tax benefit from exercise of stock options and other awards	$ 10
Selling, general and administrative expense
Stock based compensation
Stock-based compensation expense	48	54	49
Cost of services expense
Stock based compensation
Stock-based compensation expense	5	5	5
Long-Term Incentive Plans | Stock Options
Stock based compensation
Stock-based compensation expense	3	3	5
Long-Term Incentive Plans | Restricted Stock Units
Stock based compensation
Stock-based compensation expense	30	33	30
Long-Term Incentive Plans | Performance Share Units
Stock based compensation
Stock-based compensation expense	17	21	17
Long-Term Incentive Plans | Deferred Compensation Stock Units
Stock based compensation
Stock-based compensation expense	1	0	0
Non-Employee Directors' Plan
Stock based compensation
Stock-based compensation expense	$ 2	$ 2	$ 2

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Stock-Based Compensation - TDS excluding UScellular, Valuation model (Details) - TDS Parent Company - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
TDS Long-Term Incentive Plans | Stock Options
Black Scholes valuation model assumptions
Expected life	6 years 2 months 12 days	6 years 2 months 12 days	6 years 3 months 18 days
Expected annual volatility rate	35.00%	29.00%	28.60%
Dividend yield	3.60%	2.10%	2.50%
Risk-free interest rate	0.50%	2.40%	2.90%
Common Shares | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period	3 years
Common Shares | TDS Long-Term Incentive Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved	17,025,000
Common Shares | TDS Long-Term Incentive Plans | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Common Shares | Non-Employee Directors' Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved	182,000
Common Shares | Maximum | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	10 years
Terminated Employees | Common Shares | TDS Long-Term Incentive Plans | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	30 days
Retired Employees | Common Shares | Minimum | TDS Long-Term Incentive Plans | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	90 days
Retired Employees | Common Shares | Maximum | TDS Long-Term Incentive Plans | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	1 year

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Stock-Based Compensation - TDS excluding UScellular, Stock option rollforward schedules (Details) - TDS Parent Company - Common Shares - Stock Options - TDS Long-Term Incentive Plans - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Stock compensation, number of shares
Outstanding, beginning of period (in shares)	4,091,000
Granted options (in shares)	387,000
Forfeited options (in shares)	(4,000)
Expired options (in shares)	(188,000)
Outstanding, end of period (in shares)	4,286,000	4,091,000
Exercisable options, end of period (in shares)	3,176,000
Stock compensation, other information
Options outstanding, beginning of period - weighted average exercise price (USD per share)	$ 26.63
Options granted, weighted average exercise price (USD per share)	19.15
Options forfeited, weighted average exercise price (USD per share)	26.64
Options expired, weighted average exercise price (USD per share)	26.90
Options outstanding, end of period - weighted average exercise price (USD per share)	25.94	$ 26.63
Options exercisable, end of period - weighted average exercise price (USD per share)	$ 26.50
Aggregate intrinsic value, options outstanding	$ 0
Aggregate intrinsic value, options exercisable	$ 0
Weighted average remaining contractual life, outstanding	4 years 8 months 12 days
Weighted average remaining contractual life, exercisable	3 years 4 months 24 days
Options granted, weighted average grant date fair value	$ 4.24	$ 7.70	$ 6.33
Aggregate intrinsic value, options exercised		$ 7	$ 14

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Stock-Based Compensation - TDS excluding UScellular, Nonvested shares and other stock compensation disclosures (Details) - TDS Parent Company - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Common Shares | Non-Employee Directors' Plan
Shares issued and granted under stock compensation plans
Shares issued	43,000	28,000	32,000
Shares reserved	182,000
Common Shares | Automatic Dividend Reinvestment and Stock Purchase Plans
Shares issued and granted under stock compensation plans
Shares reserved	2,393,000
Purchase price, percent	95.00%
Common Shares | Restricted Stock Units
Stock based compensation, Nonvested shares rollforward, number of shares
Nonvested stock units, beginning of period - Number of shares (in shares)	1,233,000
Granted number of shares (in shares)	661,000
Vested number of shares (in shares)	(377,000)
Forfeited number of shares (in shares)	(21,000)
Nonvested stock units, end of period - Number of shares (in shares)	1,496,000	1,233,000
Stock based compensation, Nonvested shares weighted average grant date fair value
Nonvested stock units - beginning of period weighted average grant date fair value (USD per share)	$ 26.16
Granted weighted average grant date fair value (USD per share)	17.19	$ 28.81	$ 23.87
Vested weighted average grant date fair value (USD per share)	25.99
Forfeited weighted average grant date fair value (USD per share)	24.89
Nonvested stock units - end of period weighted average grant date fair value (USD per share)	$ 22.26	$ 26.16
Shares issued and granted under stock compensation plans
Fair value of vested stock units	$ 7,000,000	$ 11,000,000	$ 9,000,000
Common Shares | Performance Share Units
Stock based compensation, Nonvested shares rollforward, number of shares
Nonvested stock units, beginning of period - Number of shares (in shares)	489,000
Granted number of shares (in shares)	521,000
Vested number of shares (in shares)	(63,000)
Change in units based on approved performance factors (in shares)	4,000
Forfeited number of shares (in shares)	(55,000)
Accumulated dividend equivalents (in shares)	28,000
Nonvested stock units, end of period - Number of shares (in shares)	924,000	489,000
Stock based compensation, Nonvested shares weighted average grant date fair value
Nonvested stock units - beginning of period weighted average grant date fair value (USD per share)	$ 28.53
Granted weighted average grant date fair value (USD per share)	19.15	$ 30.72	$ 25.70
Vested weighted average grant date fair value (USD per share)	27.79
Change in units based on approved performance factors weighted average grant date fair value (USD per share)	27.79
Forfeited weighted average grant date fair value (USD per share)	27.83
Accumulated dividend equivalents, weighted average grant date fair value (USD per share)	23.91
Nonvested stock units - end of period weighted average grant date fair value (USD per share)	$ 23.18	$ 28.53
Shares issued and granted under stock compensation plans
Fair value of vested stock units	$ 2,000,000	$ 4,000,000	$ 0
Common Shares | Performance Share Units | Minimum
Shares issued and granted under stock compensation plans
Performance share awards target	0.00%
Common Shares | Performance Share Units | Maximum
Shares issued and granted under stock compensation plans
Performance share awards target	200.00%
Common Shares | Deferred Compensation Stock Units
Shares issued and granted under stock compensation plans
Percent of match up to 50% from annual bonus	25.00%
Percent of match above 50% from annual bonus	33.00%
Award vesting period	3 years
Weighted average grant date fair value (USD per share)	$ 19.44	$ 31.05	$ 28.96
Vested number of shares, unissued	107,000
Vested number of shares, unissued, fair value	$ 2,000,000
Common Shares | Deferred Compensation Stock Units | Maximum
Shares issued and granted under stock compensation plans
Fair value of vested stock units	$ 1,000,000	$ 1,000,000	$ 1,000,000
Series A Common Shares | Series A Common Share Automatic Dividend Reinvestment Plan
Shares issued and granted under stock compensation plans
Shares reserved	129,000
Purchase price, percent	95.00%

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Stock-Based Compensation - UScellular, Overview (Details) - UScellular - Common Shares	Dec. 31, 2020 shares
UScellular Long-Term Incentive Plans
Stock-based compensation, overview
Shares reserved	12,193,000
Non-Employee Directors' Plan
Stock-based compensation, overview
Shares reserved	105,000

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Stock-Based Compensation - UScellular, Stock options (Details) - UScellular Long-Term Incentive Plans - Common Shares - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2020
Stock compensation, number of shares
Stock options outstanding	460		418
Stock compensation, other information
Stock options outstanding - weighted average exercise price (USD per share)	$ 42.20		$ 42.23
Aggregate intrinsic value, options exercised	$ 3	$ 19

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Stock-Based Compensation - UScellular, Nonvested shares and other stock compensation disclosures (Details) - Common Shares - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
UScellular Long-Term Incentive Plans | Restricted Stock Units
Stock based compensation, Nonvested shares rollforward, number of shares
Nonvested stock units, beginning of period - Number of shares (in shares)	1,461,000
Granted number of shares (in shares)	1,020,000
Vested number of shares (in shares)	(653,000)
Forfeited number of shares (in shares)	(168,000)
Nonvested stock units, end of period - Number of shares (in shares)	1,660,000	1,461,000
Stock based compensation, Nonvested shares weighted average grant date fair value
Nonvested stock units - beginning of period weighted average grant date fair value (USD per share)	$ 40.90
Granted weighted average grant date fair value (USD per share)	29.18	$ 46.81	$ 38.19
Vested weighted average grant date fair value (USD per share)	35.54
Forfeited weighted average grant date fair value (USD per share)	34.81
Nonvested stock units - end of period weighted average grant date fair value (USD per share)	$ 36.43	$ 40.90
Shares issued and granted under stock compensation plans
Fair value of vested stock units	$ 20,000,000	$ 25,000,000	$ 16,000,000
UScellular Long-Term Incentive Plans | Restricted Stock Units | UScellular
Shares issued and granted under stock compensation plans
Award vesting period	3 years
UScellular Long-Term Incentive Plans | Performance Share Units
Stock based compensation, Nonvested shares rollforward, number of shares
Nonvested stock units, beginning of period - Number of shares (in shares)	1,245,000
Granted number of shares (in shares)	582,000
Vested number of shares (in shares)	(398,000)
Change in units based on approved performance factors number of shares	20,000
Forfeited number of shares (in shares)	(144,000)
Nonvested stock units, end of period - Number of shares (in shares)	1,305,000	1,245,000
Stock based compensation, Nonvested shares weighted average grant date fair value
Nonvested stock units - beginning of period weighted average grant date fair value (USD per share)	$ 40.16
Granted weighted average grant date fair value (USD per share)	29.71	$ 46.43	$ 38.81
Vested weighted average grant date fair value (USD per share)	36.92
Change in units based on approved performance factors weighted average grant date fair value (USD per share)	46.43
Forfeited weighted average grant date fair value (USD per share)	40.05
Nonvested stock units - end of period weighted average grant date fair value (USD per share)	$ 36.60	$ 40.16
Shares issued and granted under stock compensation plans
Fair value of vested stock units	$ 11,000,000		$ 0
UScellular Long-Term Incentive Plans | Performance Share Units | UScellular
Shares issued and granted under stock compensation plans
Award vesting period	3 years
UScellular Long-Term Incentive Plans | Performance Share Units | Minimum
Shares issued and granted under stock compensation plans
Performance share awards target	50.00%
UScellular Long-Term Incentive Plans | Performance Share Units | Maximum
Shares issued and granted under stock compensation plans
Fair value of vested stock units		$ 1,000,000
Performance share awards target	200.00%
UScellular Long-Term Incentive Plans | Deferred Compensation Stock Units
Stock based compensation, Nonvested shares weighted average grant date fair value
Granted weighted average grant date fair value (USD per share)	$ 31.79	$ 0	$ 40.72
Shares issued and granted under stock compensation plans
Fair value of vested stock units	$ 1,000,000
Percent of match up to 50% from annual bonus	25.00%
Percent of match above 50% from annual bonus	33.00%
Award vesting period	3 years
Vested number of shares, unissued	63,000
Vested number of shares, unissued, fair value	$ 2,000,000
UScellular Long-Term Incentive Plans | Deferred Compensation Stock Units | Maximum
Shares issued and granted under stock compensation plans
Fair value of vested stock units		$ 1,000,000	$ 1,000,000
Non-Employee Directors' Plan | UScellular
Shares issued and granted under stock compensation plans
Shares issued	19,000	13,000	18,000

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Business Segment Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020		Dec. 31, 2019		Dec. 31, 2018
Segment Reporting Information [Line Items]
Total operating revenues	$ 5,225		$ 5,176		$ 5,109
Selling, general and administrative	1,681		1,717		1,694
Depreciation, amortization and accretion	909		932		883
(Gain) loss on asset disposals, net	27		12		9
(Gain) loss on sale of business and other exit costs, net	0		(1)		0
(Gain) loss on license sales and exchanges, net	(5)		0		(18)
Operating income	259		179		205
Equity in earnings of unconsolidated entities	181		168		160
Interest and dividend income	15		29		26
Gain (loss) on investments	2		0		0
Interest expense	(168)		(165)		(172)
Other, net	(1)		0		2
Income before income taxes	288		211		221
Income tax expense (benefit)	19		64		46
Net income	269		147		175
Depreciation, amortization and accretion	909		932		883
(Gain) loss on asset disposals, net	27		12		9
(Gain) loss on sale of business and other exit costs, net	0		(1)		0
Gain (loss) on investments	(2)		0		0
(Gain) loss on license sales and exchanges, net	(5)		0		(18)
Interest expense	168		165		172
Income tax expense	19		64		46
Adjusted EBITDA	1,385		1,319		1,267
Investments in unconsolidated entities	477		488		480
Total assets	12,525	[1]	10,781	[1]	9,783
Capital expenditures	1,317		1,032		767
UScellular
Segment Reporting Information [Line Items]
Total operating revenues	4,037		4,022		3,967
Selling, general and administrative	1,368		1,406		1,388
Depreciation, amortization and accretion	683		702		640
(Gain) loss on asset disposals, net	25		19		10
(Gain) loss on sale of business and other exit costs, net			(1)
(Gain) loss on license sales and exchanges, net	(5)				(18)
Operating income	173		112		158
Equity in earnings of unconsolidated entities	179		166		159
Interest and dividend income	8		17		15
Gain (loss) on investments	2
Interest expense	(112)		(110)		(116)
Other, net	0				(1)
Income before income taxes	250		185		215
Income tax expense (benefit)	17		52		51
Net income	233		133		164
Depreciation, amortization and accretion	683		702		640
(Gain) loss on asset disposals, net	25		19		10
(Gain) loss on sale of business and other exit costs, net			(1)
Gain (loss) on investments	(2)
(Gain) loss on license sales and exchanges, net	(5)				(18)
Interest expense	112		110		116
Income tax expense	17		52		51
Adjusted EBITDA	1,063		1,015		963
Investments in unconsolidated entities	435		447		441
Total assets	9,681		8,164		7,274
Capital expenditures	940		710		515
TDS Telecom
Segment Reporting Information [Line Items]
Total operating revenues	976		930		927
Selling, general and administrative	270		260		254
Depreciation, amortization and accretion	203		200		212
(Gain) loss on asset disposals, net	1		(7)		(2)
(Gain) loss on sale of business and other exit costs, net			0
(Gain) loss on license sales and exchanges, net	0				0
Operating income	110		107		93
Equity in earnings of unconsolidated entities	0		0		0
Interest and dividend income	5		12		8
Gain (loss) on investments	0
Interest expense	4		3		2
Other, net	(1)				2
Income before income taxes	117		122		105
Income tax expense (benefit)	18		30		16
Net income	100		92		89
Depreciation, amortization and accretion	203		200		212
(Gain) loss on asset disposals, net	1		(7)		(2)
(Gain) loss on sale of business and other exit costs, net			0
Gain (loss) on investments	0
(Gain) loss on license sales and exchanges, net	0				0
Interest expense	(4)		(3)		(2)
Income tax expense	18		30		16
Adjusted EBITDA	317		313		313
Investments in unconsolidated entities	4		4		4
Total assets	2,359		2,196		1,934
Capital expenditures	368		316		232
TDS Telecom Wireline
Segment Reporting Information [Line Items]
Total operating revenues	685		683		699
Selling, general and administrative	199		199		197
Depreciation, amortization and accretion	124		132		142
(Gain) loss on asset disposals, net	0		(8)		(3)
(Gain) loss on sale of business and other exit costs, net			0
(Gain) loss on license sales and exchanges, net	0				0
Operating income	92		96		95
Equity in earnings of unconsolidated entities	0		0		0
Interest and dividend income	4		10		7
Gain (loss) on investments	0
Interest expense	4		3		2
Other, net	(1)				3
Income before income taxes	99		110		106
Depreciation, amortization and accretion	124		132		142
(Gain) loss on asset disposals, net	0		(8)		(3)
(Gain) loss on sale of business and other exit costs, net			0
Gain (loss) on investments	0
(Gain) loss on license sales and exchanges, net	0				0
Interest expense	(4)		(3)		(2)
Adjusted EBITDA	220		231		243
Investments in unconsolidated entities	4		4		4
Total assets	1,641		1,471		1,304
Capital expenditures	293		243		176
TDS Telecom Cable
Segment Reporting Information [Line Items]
Total operating revenues	292		247		230
Selling, general and administrative	72		62		57
Depreciation, amortization and accretion	78		68		69
(Gain) loss on asset disposals, net	1		1		1
(Gain) loss on sale of business and other exit costs, net			0
(Gain) loss on license sales and exchanges, net	0				0
Operating income	18		11		(2)
Equity in earnings of unconsolidated entities	0		0		0
Interest and dividend income	1		2		1
Gain (loss) on investments	0
Interest expense	0		0		0
Other, net	0				0
Income before income taxes	18		13		(1)
Depreciation, amortization and accretion	78		68		69
(Gain) loss on asset disposals, net	1		1		1
(Gain) loss on sale of business and other exit costs, net			0
Gain (loss) on investments	0
(Gain) loss on license sales and exchanges, net	0				0
Interest expense	0		0		0
Adjusted EBITDA	97		82		70
Investments in unconsolidated entities	0		0		0
Total assets	730		734		639
Capital expenditures	75		73		56
Corporate, Eliminations and Other
Segment Reporting Information [Line Items]
Total operating revenues	212		224		215
Selling, general and administrative	43		51		52
Depreciation, amortization and accretion	23		30		31
(Gain) loss on asset disposals, net	1		0		1
(Gain) loss on sale of business and other exit costs, net			0
(Gain) loss on license sales and exchanges, net	0				0
Operating income	(24)		(40)		(46)
Equity in earnings of unconsolidated entities	2		2		1
Interest and dividend income	2		0		3
Gain (loss) on investments	0
Interest expense	(60)		(58)		(58)
Other, net	0				1
Income before income taxes	(79)		(96)		(99)
Income tax expense (benefit)	(16)		(18)		(21)
Net income	(64)		(78)		(78)
Depreciation, amortization and accretion	23		30		31
(Gain) loss on asset disposals, net	1		0		1
(Gain) loss on sale of business and other exit costs, net			0
Gain (loss) on investments	0
(Gain) loss on license sales and exchanges, net	0				0
Interest expense	60		58		58
Income tax expense	(16)		(18)		(21)
Adjusted EBITDA	5		(9)		(9)
Investments in unconsolidated entities	38		37		35
Total assets	485		421		575
Capital expenditures	9		6		20
Service
Segment Reporting Information [Line Items]
Total operating revenues	4,136		4,059		3,999
Cost of goods and services sold	1,244		1,202		1,206
Service | UScellular
Segment Reporting Information [Line Items]
Total operating revenues	3,067		3,035		2,978
Cost of goods and services sold	782		756		758
Service | TDS Telecom
Segment Reporting Information [Line Items]
Total operating revenues	975		928		925
Cost of goods and services sold	392		368		369
Service | TDS Telecom Wireline
Segment Reporting Information [Line Items]
Total operating revenues	684		682		697
Cost of goods and services sold	269		263		266
Service | TDS Telecom Cable
Segment Reporting Information [Line Items]
Total operating revenues	292		247		230
Cost of goods and services sold	123		105		104
Service | Corporate, Eliminations and Other
Segment Reporting Information [Line Items]
Total operating revenues	94		96		96
Cost of goods and services sold	70		78		79
Equipment and product sales
Segment Reporting Information [Line Items]
Total operating revenues	1,089		1,117		1,110
Cost of goods and services sold	1,110		1,135		1,130
Equipment and product sales | UScellular
Segment Reporting Information [Line Items]
Total operating revenues	970		987		989
Cost of goods and services sold	1,011		1,028		1,031
Equipment and product sales | TDS Telecom
Segment Reporting Information [Line Items]
Total operating revenues	1		1		2
Cost of goods and services sold	1		1		1
Equipment and product sales | TDS Telecom Wireline
Segment Reporting Information [Line Items]
Total operating revenues	1		1		2
Cost of goods and services sold	1		1		1
Equipment and product sales | TDS Telecom Cable
Segment Reporting Information [Line Items]
Total operating revenues	0		0		0
Cost of goods and services sold	0		0		0
Equipment and product sales | Corporate, Eliminations and Other
Segment Reporting Information [Line Items]
Total operating revenues	118		129		119
Cost of goods and services sold	$ 98		$ 106		$ 98

[1] The consolidated total assets as of December 31, 2020 and 2019, include assets held by consolidated variable interest entities (VIEs) of $1,042 million and $915 million, respectively, which are not available to be used to settle the obligations of TDS. The consolidated total liabilities as of December 31, 2020 and 2019, include certain liabilities of consolidated VIEs of $18 million and $20 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of TDS. See Note 15 — Variable Interest Entities for additional information.

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Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Supplemental Cash Flow [Line Items]
Interest paid	$ 160	$ 162	$ 168
Income taxes paid, net of refunds received	(23)	44	40
Supplemental cash flows, stock based compensation
Cash disbursements for payment of taxes	(3)	(6)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards			42
TDS Parent Company
Supplemental cash flows, stock based compensation
Cash receipts upon exercise of stock options	0	2	48
Cash disbursements for payment of taxes	(3)	(8)	(6)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	(3)	(6)	42
UScellular
Supplemental cash flows, stock based compensation
Cash receipts upon exercise of stock options	0	1	29
Cash disbursements for payment of taxes	(11)	(10)	(11)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$ (11)	$ (9)	$ 18
Common Shares | TDS Parent Company
Supplemental cash flows, stock based compensation
Common Shares withheld (in shares)	153,000	814,000	676,000
Aggregate value of Common Shares withheld	$ 3	$ 29	$ 21
UScellular Common Shares | UScellular
Supplemental cash flows, stock based compensation
Common Shares withheld (in shares)	376,000	452,000	1,550,000
Aggregate value of Common Shares withheld	$ 11	$ 23	$ 73

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Certain Relationships and Related Transactions (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Sidley Austin LLP
Related Party Transaction [Line Items]
Legal expense	$ 11	$ 10	$ 10