The Shareholder Forum for Telephone & Data Systems, Inc.

A Forum program for shareholders of Telephone and Data Systems, Inc. (NYSE: TDS), and its publicly traded subsidiary, United States Cellular Corporation (NYSE: USM), was requested in April 2009 to consider alternatives for reducing a market valuation discount of more than 30%,[1] including

(b) selling or restructuring the 81% TDS ownership of its US Cellular subsidiary, and

(c) simplifying the four classes of TDS stock that provide control to a family voting trust holding only 11% of the economic equity interests.[2]

The initial focus of the program was on a shareholder proposal for recapitalization presented by Southeastern Asset Management, the company’s largest shareholder by economic interest, and on four questions developed at an open Forum meeting hosted by the New York Society of Security Analysts for presentation to management.[3] The company’s chairman declined to respond to the questions at the company’s annual meeting,[4] and management subsequently refused to respond to the questions or other shareholder information requests.[5]

Responding to an 85% vote of non-management shareholders in support of the proposed restructuring,[6] and with trading in the various classes of TDS and US Cellular stock supporting the focus of Forum participants on event-driven opportunities for value enhancement, the following workshop projects were initiated to continue attention to shareholder interests:[7]

► Management Responsibility – to assure board members’ understanding of their duties to act in the interests of the company and all of its shareholders

► Value Enhancement Alternatives – to identify specific strategic opportunities that can be presented to the company’s board

This Forum program continues to be open, free of charge, to all marketplace decision-makers and the professionals who advise them, according to the Forum's standard Conditions of Participation.

[1] Compared with the averages for all companies in the Reuters Wireless Telecommunications Services Industry Index and its Telecommunications Services Sector Index, the TDS Common Stock price of $27.49 as of the April 27, 2009 market close, the day before the Forum program was announced, was 54.8% and 29.9% below the averages of those wireless industry and telecom sector ratios to revenue, and 40.1% and 38.8% below the average wireless and telecom ratios to book value. As of the August 21, 2009 market close, after concluding the initial TDS Forum project, the closing price of TDS Common was $26.44 (3.8% lower than April 27) and its discounts to wireless industry and telecom sector averages, respectively, were 58.7% and 37.4% relative to sales, and 46.1% and 37.2% relative to book value. During the same period, the publicly traded stock of the US Cellular subsidiary, reacting to both positive strategic evaluations and negative competitive analyses (see, for example, July 24, 2009, Macquarie Research Equities; 10 pages, 211 KB, in PDF format) increased 10.4% in price from $32.37 to $35.73 per share, reducing its discounts to the averages of Reuters wireless industry indices from 51.1% to 47.1% relative to sales and from 35.8% to 34.8% relative to book value.

[2] As reported in the TDS proxy statement, a voting trust for members of the founding Carlson family holds approximately 11% of total common stock that includes 95% of the Series A Common Shares with 10 votes per share and the right to elect 8 of the board’s 12 members, providing the trust with control of the board and 52.5% of total voting power.

[3] See May 15, 2009 Forum Report: Meeting's Definition of Value Enhancement Alternatives and Questions for Directors.

[4] See May 22, 2009 Forum Report: No Questions Allowed at TDS Annual Meeting.

[5] See July 30, 2009 Forum Report: Management Choice of Adversary Response to Shareholder Interests.

[6] See August 7, 2009 Forum Report: 85% Vote in Support of Change.

[7] See August 17, 2009 Forum Report: Projects for Continuing Attention to TDS Shareholder Interests