TELEPHONE & DATA SYSTEMS INC /DE/
424B3, 2000-09-26
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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                                                Registration Number 033-64293-99
                                                    Filed Pursuant to 424(b)(3)

PROSPECTUS

Telephone and Data Systems, Inc.                           (TDS LOGO)

2,750,000         Common Shares ($.01 Par Value)

         We may use this  Prospectus to offer and sell Common  Shares,  $.01 par
value, of Telephone and Data Systems,  Inc., a Delaware corporation.  The Common
Shares are listed on the American Stock Exchange under the listing symbol "TDS".
We  may  issue  such  shares  in  connection  with  acquisitions  by  TDS or its
subsidiaries. Such shares may be issued in exchange for shares of capital stock,
partnership  interests,  assets  or any  other  interest  in the  company  to be
acquired or its assets.  Such shares may also be issued  pursuant to  collateral
agreements  related  to  such  acquisitions,  including  employment  agreements,
consulting  agreements and  non-competition  agreements.  This  Prospectus  also
covers Common  Shares which may be issuable  upon  conversion or exchange of any
securities of TDS or its subsidiaries. Such acquisitions and the issuance of TDS
shares  under  such  agreements  will  generally  be  effected   through  direct
negotiations with the owners of the business or assets to be acquired.  However,
in the case of entities  which are more widely  held,  such shares may be issued
through exchange offers to stockholders or documents  soliciting the approval of
statutory mergers,  consolidations or sales of assets. Underwriting discounts or
commissions   will   generally  not  be  paid  by  TDS.   However,   under  some
circumstances,  TDS may  issue  securities  covered  by this  Prospectus  to pay
brokers' commissions or similar fees incurred in connection with acquisitions.

         This Prospectus, as amended or supplemented if appropriate, may also be
used  by  the  persons  who  have  or  will  receive  shares  issued  by  TDS in
acquisitions,  including  shares sold  hereunder  and  securities  received upon
conversion of other equity securities of TDS or received upon exercise of rights
to exchange equity  securities of TDS subsidiaries  issued in acquisitions,  and
who  wish  to  offer  and  sell  such  shares,  on  terms  then  obtainable,  in
transactions in which they may be deemed  underwriters within the meaning of the
Securities Act of 1933.  Any profits  realized on such sales by such persons may
be regarded as underwriting compensation under the Securities Act of 1933.

          TDS's  Common  Shares have less voting  power than its Series A Common
Shares. The Series A Common Shares, which have effective control of TDS, are not
being offered by this Prospectus.

         See "Risk Factors"  beginning on page 4 for certain factors that should
be considered by you before you invest in these securities.

                      ----------------------

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or  disapproved  of these  securities or has passed upon
the accuracy or adequacy of this Prospectus.  Any representation to the contrary
is a criminal offense.

                    ----------------------

            The  date  of  this   Prospectus  is September 26, 2000.

<PAGE>


                                TABLE OF CONTENTS

                                                                           Page

SUMMARY........................................................................3


RISK FACTORS...................................................................4


TDS............................................................................9


USE OF PROCEEDS/PLAN OF DISTRIBUTION...........................................9


LEGAL MATTERS.................................................................10


EXPERTS.......................................................................10


WHERE YOU CAN FIND MORE INFORMATION...........................................10


Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary
Statement

         This  Prospectus  and the documents  incorporated  by reference  herein
contain  statements that are not based on historical  fact,  including the words
"believes,"  "anticipates,"  "intends,"  "expects,"  and  similar  words.  These
statements  constitute  "forward-looking"  statements  within the meaning of the
Private  Securities   Litigation  Reform  Act  of  1995.  Such   forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may  cause  the  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 factors include:

     * general  economic and business  conditions,  both  nationally  and in the
     regions in which TDS operates,

     * technology changes,

     * competition,

     * changes in governmental regulations,

     * pending and future litigation,

     * changes in growth in cellular customers,  penetration rates, churn rates,
     roaming rates and the mix of products and services  offered in our markets,
     and

     * other factors  described or incorporated in this  Prospectus,  including,
     without limitation, the factors described under "Risk Factors.".

         Investors  are  encouraged  to  consider  these  and  other  risks  and
uncertainties  that are discussed in documents  filed by TDS with the Securities
and Exchange Commission.


                                        2

<PAGE>



                                     SUMMARY

         This summary  highlights  selected  information  from this document and
does not contain all of the  information  that is  important  to you. You should
carefully read this entire document and the documents  incorporated by reference
in this document. See "Where You Can Find More Information."

                                       TDS

         TDS is a diversified  telecommunications  service company that provides
high-quality  telecommunications  services  to  more  than  3  million  wireless
telephone and wireline telephone customers.  TDS's business development strategy
is to expand its existing operations through internal growth and acquisitions.

                           The Securities We May Offer

         We may offer up to 2,750,000 Common Shares of TDS.

                               Purpose of Offering

         The Common Shares are being offered in connection with  acquisitions by
TDS or its subsidiaries.

                              Market for Securities

         The Common Shares are listed on the American  Stock  Exchange under the
symbol "TDS".

                              Resale of Securities

         This  Prospectus,  as  amended  or  supplemented,  may  also be used by
persons  who  have  or  will  receive  TDS  Common  Shares  in  connection  with
acquisitions and who wish to offer and sell such shares.

                                  Risk Factors

         An investment in the Common Shares  involves  certain risks.  See "Risk
Factors" immediately following this summary.

                       Where You Can Find More Information

         This Prospectus  "incorporates by reference" certain  information about
TDS and its  subsidiaries  from TDS's  filings  with the SEC. See "Where You Can
Find More Information" about how to obtain copies of such filings.

                              Address and Telephone

         The address of TDS is 30 North  LaSalle  Street,  Suite 4000,  Chicago,
Illinois 60602; and its telephone number is (312) 630-1900.


                                        3
<PAGE>



                                  RISK FACTORS

         An investment  in the Common Shares  offered  hereby  involves  certain
risks.  Accordingly,  you  should  consider  carefully  the  following  factors,
together with the other  information  contained or  incorporated by reference in
this  Prospectus,  before  purchasing  the Common Shares  offered  hereby.  This
Prospectus  includes or  incorporates  certain  forward-looking  statements that
involve risk and  uncertainty.  Actual  results and the timing of certain events
could differ materially from those projected in the  forward-looking  statements
as a result of the risk  factors  set forth  below and other  factors  discussed
elsewhere in this Prospectus.  See "Private Securities  Litigation Reform Act of
1995 Safe Harbor Cautionary  Statement."  Capitalized terms used but not defined
in this section are used as defined elsewhere in this Prospectus.

Risks of Adverse Developments in the Business of TDS

TDS is subject to  extensive  government  regulation  that could have an adverse
effect on its businesses.

         TDS and its business  units are subject to extensive  federal and state
regulation.  The  Telecommunications  Act of  1996  (the  "1996  Act")  mandates
significant changes in existing regulation of the telecommunications industry to
promote  competitive  development  of new service  offerings,  to expand  public
availability of telecommunications  services and to streamline regulation of the
industry.  The  implementation  of these mandates by the Federal  Communications
Commission   ("FCC")  and  state   authorities   involves  numerous  changes  in
established  rules and policies  which could  adversely  affect TDS's  financial
condition or results of operations. In particular,  TDS Telecom may be adversely
affected by reduced allowable rates of return,  reduced access charges,  reduced
payments from the universal service fund and increased competition.

TDS's  businesses face  uncertainty  from competition and the development of new
technologies.

         The   1996   Act  was   intended   to   promote   competition   in  the
telecommunications  industry as a national policy.  TDS expects that competition
will  increase  with  existing   competitors   and  with  other   communications
technologies  that  now  exist,  such  as  specialized  mobile  radio,  enhanced
specialized  mobile  radio,  global  satellite  networks and cable  systems.  In
addition,  TDS may face competition from  technologies that may be introduced in
the future.

         All of such  competition  is expected  to be  intense.  There can be no
assurance that TDS will be able to compete  successfully in this  environment or
that new technologies and products that are more commercially effective than the
technologies  and products  utilized by TDS will not be developed.  In addition,
many of TDS's  competitors  have  substantially  greater  financial,  technical,
marketing,  sales  and  distribution  resources  than  those  of  TDS  and  have
significantly   greater   experience   than  TDS  in  testing  new  or  improved
telecommunications products and services and obtaining regulatory approvals.

TDS's businesses could be adversely affected by rapid technological changes.

         The  telecommunications  industry  has  experienced  and is expected to
continue to experience rapid and significant changes in technology.  Alternative
technologies  may develop for the  provision of services to customers  which may
render certain  technologies used by TDS unprofitable or obsolete.  There can be
no assurance that  technological  developments  will not have a material adverse
effect on TDS.


                                        4
<PAGE>

TDS's revenue growth and profitability are uncertain.

         Changes in any of several factors could reduce TDS's revenue growth and
profitability. These factors include, but are not limited to:

     1. the growth rate in TDS's customer base;

     2. the usage and pricing of services;

     3. the churn rate;

     4. the cost of providing  services,  including the cost of  attracting  new
     customers;

     5.   increasing   competition   from  new   competitors  or  from  emerging
     technologies;

     6.  continuing   technological   advances  which  may  provide   additional
     competitive alternatives to TDS's services; and

     7. the  sale or trade of  existing  properties  or the  acquisition  of new
     properties.

TDS may be  adversely  affected  if it or any of its  subsidiaries  is unable to
obtain  sufficient funds to finance its business on terms and prices  acceptable
to TDS.

         TDS  and  its   subsidiaries   operate   relatively   capital-intensive
businesses.  TDS has  used  internally-generated  funds  and has  also  obtained
substantial funds from external sources to finance the build-out of markets,  to
fund acquisitions and for general corporate purposes.  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. If sufficient  funding is not available
to TDS or its  subsidiaries  on terms and prices  acceptable  to TDS, TDS or its
subsidiaries  may be  required to reduce  their  construction,  development  and
acquisition  programs.  In the  long  term,  reduction  of  TDS's  construction,
development and acquisition programs would have a negative impact on the ability
of TDS and its subsidiaries to increase their consolidated revenues,  income and
cash flows.

TDS  has  significant  investments  in FCC  licenses  which  may  not  be  fully
recovered.

         A large  portion of TDS's assets  consist of  intangible  assets in the
form of investments in licenses. In many cases the transfer of such interests is
restricted and subject to FCC or state  regulatory  approval.  In some cases the
transfer  of TDS's  interests  is  subject  to  rights of first  refusal.  TDS's
cellular  licenses  are  granted by the FCC for  ten-year  terms and there is no
assurance  that licenses will be renewed.  In addition,  the future value of all
cellular interests will depend significantly upon the success of TDS's business.
While there is a current  market for  cellular  licenses,  such a market may not
exist in the future or the values obtainable may be significantly  lower than at
present.  In  addition,  the value of  licenses  may be affected by the level of
supply and demand for such licenses and therefore awards of additional  licenses
to new  competitors or for  competitive  technologies  may adversely  affect the
value of TDS's licenses.

TDS faces risks of expansion and entry into new businesses.

         TDS  believes  that a portion  of its  future  growth may come from the
development of new technologies and expansion into new markets. TDS is currently
expanding into other related  telecommunications  businesses,  such as providing
data and Internet  services,  and entering into new local telephone markets as a
competitive  local  exchange  carrier.  Such new business  development  requires
significant expenditures, a substantial portion of which must be made before any
revenues will be realized. Such capital expenditures are expected to increase as
TDS  decides  to  pursue  opportunities  created  by  the  accelerated  pace  of
regulatory  changes  designed  to  increase  competition.   These

                                        5
<PAGE>
expenditures,  together  with  the  associated  high  initial  service  costs of
providing service in new markets, may result in negative cash flow and operating
losses from new businesses until an adequate revenue base is established.  There
can be no assurance that an adequate revenue base will be established in any new
technology or market which TDS pursues.

         As TDS expands into new  telecommunications  businesses,  it will incur
certain additional risks in connection with such expansion,  including increased
legal and regulatory risks, and possible adverse reaction by some of its current
customers. Such telecommunications businesses and markets are highly competitive
and, as a new entrant, TDS may be disadvantaged. The success of TDS's entry into
new  telecommunications  businesses will be dependent upon,  among other things,
TDS's  ability to select new  equipment  and software  and to integrate  the new
equipment  and  software  into  its  operations,  to hire  and  train  qualified
personnel and to enhance its billing,  back-office  and  information  systems to
accommodate new services.  No assurance can be given that TDS will be successful
with respect to these  telecommunications  businesses.  If TDS is not successful
with respect to these matters, there may be a material adverse effect on TDS. In
addition,  demand and market  acceptance for these new products and services are
subject to a high level of uncertainty.

TDS faces the risk of losses  in the  value of its  significant  investments  in
entities that it does not control.

         TDS has  significant  investments in entities that it does not control,
including  but not  limited to, as of the date of this  Prospectus,  VoiceStream
Wireless  Corporation and Vodafone AirTouch PLC. We cannot assure you that these
entities  will  operate  in a  manner  that  will  increase  the  value  of  our
investments  or  that  we  will  not  incur  losses  from  the  holding  of such
investments.

TDS faces risks associated with possible acquisitions.

         TDS  expects  that a  portion  of  its  future  growth  may  come  from
acquisitions.  The  acquisition  of additional  businesses  will depend on TDS's
ability to identify suitable  acquisition  candidates,  to negotiate  acceptable
terms for their acquisition and to finance any such acquisitions.  TDS will also
be subject to competition for suitable acquisition candidates. Any acquisitions,
if made, could divert the resources and management time of TDS and would require
integration with TDS's existing business  operations and services.  As a result,
there can be no assurance that any such acquisitions will occur or that any such
acquisitions, if made, would be made in a timely manner or on terms favorable to
TDS or would be successfully integrated into TDS's operations.

TDS's  business may be adversely  affected by certain radio  frequency  emission
concerns.

         Media reports have  suggested  that certain radio  frequency  emissions
from portable cellular telephones might be linked to cancer. TDS is not aware of
any  authoritative  evidence linking the usage of portable  cellular  telephones
with cancer.  Concerns  over radio  frequency  emissions  may have the effect of
discouraging  the use of cellular  telephones and other wireless  communications
devices,  which could have an adverse effect upon TDS's financial  condition and
results of operations.  The FCC currently has a rulemaking proceeding pending to
update  the  guidelines  and  methods  it uses for  evaluating  radio  frequency
emissions in radio equipment,  including cellular telephones. While the proposal
would  impose more  restrictive  standards  on radio  frequency  emissions  from
low-power devices such as portable cellular  telephones,  it is anticipated that
all  cellular  telephones  currently  marketed and in use will comply with those
standards.


                                        6
<PAGE>

Risks Related to Capital Structure and the Common Shares

The Common Shares have limited voting rights.

         Holders of Common  Shares do not have the right to vote with respect to
the election of a majority of the directors, which are elected by the holders of
Series A Common  Shares  and  certain  series of  Preferred  Shares  of TDS.  In
addition,  only  the  affirmative  vote  of the  holders  of a  majority  of the
outstanding voting power of the Series A Common Shares, Common Shares and series
of  Preferred  Shares  which have  voting  rights  will be required to amend the
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 Restated
Certificate or the Delaware General Corporation Law. When a vote is taken on any
matter as to which all stock is voting  together  as one group,  any one or more
classes  entitled  to more than the number of votes  required  to  approve  such
matter will be in a position to control the outcome of the vote on such  matter.
Currently,  the TDS voting trust controls a majority of the voting power of TDS.
Certain matters on which holders of common stock would vote together as a single
class could  involve a  divergence  or the  appearance  of a  divergence  of the
interests between the holders of classes of common stock.

There is no assurance that TDS will continue to pay dividends.

         Although TDS has paid dividends on the Common Shares in the past, there
is no  assurance  that TDS will pay  dividends at the same rate or at all in the
future.


TDS will not require the approval of  shareholders  with respect to the possible
future issuances of authorized shares.

         The authorized  but unissued  Common Shares (as well as Series A Common
Shares and other classes of stock authorized by the TDS Restated  Certificate of
Incorporation)  will be  available  for  issuance  from time to time at the sole
discretion of the Board for any proper  corporate  purpose.  The approval of the
shareholders of TDS will not be sought by TDS for the issuance of authorized but
unissued  shares of any class of capital stock (or the  reissuance of previously
issued  shares that have been  reacquired  by TDS) or securities of TDS that are
convertible into or exercisable or exchangeable  for such shares,  unless deemed
advisable by the Board or required by  applicable  law,  regulation  or American
Stock  Exchange  requirements.  TDS has no current  plans to issue any  material
number of Common  Shares  (or Series A Common  Shares or other  class of capital
stock) except as otherwise described or incorporated by reference herein.

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.

         A substantial  majority of the  outstanding  Series A Common Shares are
held in the TDS Voting  Trust  which  expires on June 30,  2009.  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  approximately 75% (less one) of the
directors,  or eight  directors  based on the  current  size of the  Board,  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.


                                        7
<PAGE>
         The Restated Certificate of Incorporation and TDS's Bylaws also contain
provisions  which may serve to  discourage  or make more  difficult  a change in
control of TDS without the support of the Board or without meeting various other
conditions. In particular,  the Restated Certificate of Incorporation includes a
provision  which  authorizes the Board 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 Board  determines  that the
proposal is not in the best interests of the corporation  based on such factors.
The provisions of the Restated  Certificate of  Incorporation  and the Bylaws of
TDS 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 Restated  Certificate  also  authorizes  the Board to designate and
issue  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  Undesignated Shares authorized pursuant to the Restated  Certificate
of  Incorporation  unless  applicable  laws or  regulations  would  require such
approval  in a given  instance.  Such  Undesignated  Shares  could be  issued in
circumstances  that would  serve to  preserve  control  of TDS's  then  existing
management.

         The Restated Certificate of Incorporation  divides the Board into three
classes,  with staggered terms of office.  Each year, one class is elected for a
three-year term. The classification of directors may have the effect of limiting
or deterring a proxy contest for the removal of incumbent directors.

         TDS is not aware of any current  intention  of the TDS Voting  Trust to
dispose  of any  significant  amount of Series A Common  Shares of TDS or of any
existing  or  planned  effort  on the part of any party to  accumulate  material
amounts of Common Shares or Series A Common Shares, or to acquire control of TDS
by means of a merger, tender offer,  solicitation in opposition to management or
otherwise, or to change TDS's management.








                                        8

<PAGE>


                                       TDS

     TDS is a  diversified  telecommunications  service  company  with  wireless
telephone and wireline telephone operations. TDS's business development strategy
is to expand its existing  operations  through  internal growth and acquisitions
and to explore and develop other  telecommunications  businesses that management
believes  will  utilize  TDS's  expertise in  customer-based  telecommunications
services.

     United States Cellular  Corporation,  an over 80%- owned  subsidiary of TDS
operates  and invests in wireless  telephone  companies  and  properties  ("U.S.
Cellular").

     TDS  Telecommunications  Corporation,  a  wholly-owned  subsidiary  of  TDS
operates wireline telephone companies ("TDS Telecom").

     TDS is  the  successor  to  Telephone  and  Data  Systems,  Inc.,  an  Iowa
corporation  ("TDS Iowa").  In 1998, TDS Iowa merged with and into TDS, with TDS
surviving the merger. TDS's corporate headquarters are located at 30 N. LaSalle,
Suite 4000, Chicago, Illinois 60602, and its telephone number is (312) 630-1900.

     For current selected financial  information,  cash dividends paid and other
information  about  TDS,  see the TDS  Annual  Report  on Form 10-K for the most
recent fiscal year,  which includes certain portions of the TDS Annual Report to
Shareholders,  as incorporated by reference herein. See "Where You Can Find More
Information" below.


                      USE OF PROCEEDS/PLAN OF DISTRIBUTION

         The  securities  of TDS which may be offered  from time to time by this
Prospectus  include up to 2,750,000  Common Shares,  as well as an indeterminate
number of Common  Shares  which may be issuable  upon  exercise,  conversion  or
exchange of other  securities.  TDS proposes to issue such shares in  connection
with  acquisitions  by  TDS or  its  subsidiaries.  The  consideration  for  any
acquisition,  including  consideration issued under any collateral  arrangements
such  as  employment   agreements,   consulting  agreements  or  non-competition
agreements,  may consist of cash, notes or other evidences of debt,  assumptions
of liabilities,  equity securities, or a combination thereof, as determined from
time to time by  negotiations  between  TDS and  the  owners  of  businesses  or
properties to be acquired.  TDS intends to concentrate  its  acquisitions in the
telecommunications   industry,  with  primary  emphasis  on  acquiring  wireless
interests and operating telephone companies. If the opportunity arises, however,
TDS will  attempt to make  acquisitions  which are either  complementary  to its
present  operations or which it considers  advantageous  even though they may be
dissimilar to its present  activities.  In general,  such  acquisitions  will be
effected through direct negotiations  between the representatives of TDS and the
owners  of the  businesses  or  properties  to be  acquired  or,  in the case of
entities more widely held,  through exchange offers to stockholders or documents
soliciting  approval of statutory  mergers,  consolidations  or sales of assets.
Underwriting  discounts  or  commissions  will  generally  not be  paid  by TDS.
However,  under some circumstances,  TDS may issue Common Shares covered by this
Prospectus  to pay brokers'  commissions  or similar fees incurred in connection
with acquisitions.

         This  Prospectus,  as appropriately  amended or supplemented,  has also
been  prepared  for  use  by  persons  who  receive  shares  issued  by  TDS  in
acquisitions,  including  Common Shares  received upon conversion or exchange of
other equity securities of TDS or its subsidiaries  issued in acquisitions,  and
who wish to offer and sell such shares, on terms then available, in transactions
in which they may be deemed affiliates or underwriters within the meaning of the
Securities  Act of 1933 (such  persons  being  referred to under this caption as
"Selling  Shareholders").  Resales may be made pursuant to this  Prospectus,  as
amended or  supplemented,  pursuant to Rule 145(d) under the  Securities  Act of
1933, or

                                        9

<PAGE>

pursuant to an exemption from such Act.  Profits  realized on resales by Selling
Shareholders  under  certain  circumstances  may  be  regarded  as  underwriting
compensation under the Securities Act of 1933.

         Resales by Selling  Shareholders  may be made  directly to investors or
through a  securities  firm  acting as an  underwriter,  broker or dealer.  When
resales are to be made through a securities  firm,  such  securities firm may be
engaged to act as the Selling  Shareholder's agent in the sale of shares by such
Selling  Shareholder,  or such  securities  firm may  purchase  shares  from the
Selling  Shareholder as principal and thereafter resell such shares from time to
time. The fees earned by or paid to such securities firm may be the normal stock
exchange commission or negotiated  commissions or underwriting  discounts to the
extent permissible. In addition, such securities firm may effect resales through
other securities dealers, and customary commissions or concessions to such other
dealers may be allowed.  Sales of shares may be at negotiated  prices,  at fixed
prices,  at market prices or at prices related to market prices then prevailing.
Any such sales may be made on the American  Stock  Exchange or other exchange on
which such shares are traded, in the over-the-counter market, by block trade, in
special or other  offerings,  directly to investors or through a securities firm
acting  as  agent  or  principal,   or  a  combination  of  such  methods.   Any
participating   securities  firm  may  be  indemnified   against  certain  civil
liabilities,  including  liabilities  under  the  Securities  Act of  1933.  Any
participating  securities  firm may be deemed to be an  underwriter  within  the
meaning of the Securities Act of 1933, and any  commissions  earned by such firm
may be deemed to be underwriting discounts or commissions under such Act.

         A Prospectus Supplement,  if required,  will be filed under Rule 424(b)
under  the  Securities  Act  of  1933,   disclosing  the  name  of  the  Selling
Shareholder,  the  participating  securities  firm, if any, the number of shares
involved, and other details of such resale, if appropriate.


                                  LEGAL MATTERS

         Certain  legal  matters  relating  to the  securities  offered  by this
Prospectus have been passed upon for TDS by Sidley & Austin, Chicago,  Illinois.
TDS is  controlled  by a voting  trust.  Walter  C.D.  Carlson,  a  trustee  and
beneficiary of the voting trust and a director of TDS and U.S. Cellular, Michael
G. Hron, the General Counsel and an Assistant Secretary of TDS and U.S. Cellular
and the Secretary or Assistant Secretary of certain subsidiaries of TDS, William
S. DeCarlo, an Assistant  Secretary of TDS and certain  subsidiaries of TDS, and
Stephen P. Fitzell, an Assistant  Secretary of certain  subsidiaries of TDS, are
partners of Sidley & Austin.


                                     EXPERTS

         The audited  consolidated  financial  statements  and  schedules of TDS
incorporated  by  reference  in this  Prospectus  have  been  audited  by Arthur
Andersen  LLP,  independent  public  accountants,  as indicated in their reports
incorporated  by  reference  herein.  The  financial  statements  and  schedules
referred to above have been  incorporated  by  reference  in  reliance  upon the
authority  of such firms as experts in  accounting  and  auditing in giving said
reports.


                       WHERE YOU CAN FIND MORE INFORMATION

         TDS files  reports,  proxy  statements and other  information  with the
Securities  and  Exchange  Commission  ("SEC").  You may  inspect  and copy such
reports,  proxy  statements  and  other  information  at  the  public  reference
facilities  maintained  by the SEC at Room  1024,  Judiciary  Plaza,  450  Fifth
Street, N.W., Washington,  D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information. Such materials also may be accessed electronically by means
of the SEC's web site at http://www.sec.gov.

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<PAGE>

         TDS filed a Registration Statement related to the offering described in
this Prospectus.  As allowed by SEC rules,  this Prospectus does not contain all
of the information  which you can find in the  Registration  Statement.  You are
referred to the  Registration  Statement  and the  Exhibits  thereto for further
information.   This  document  is  qualified  in  its  entirely  by  such  other
information.

         The SEC allows us to "incorporate by reference"  information  into this
Prospectus,  which means that we can disclose  important  information  to you by
referring you to another document filed separately with the SEC. The information
incorporated  by reference is deemed to be part of this  Prospectus,  except for
any information superseded by information in this Prospectus.

         This Prospectus incorporates by reference the documents set forth below
that have been previously filed with the SEC. These documents  contain important
information about TDS's business and finances.

     1. TDS's Annual Report on Form 10-K for the year ended December 31, 1999;

     2. TDS's Quarterly Reports on Form 10-Q for the quarters ended March 31 and
     June 30, 2000

     3. TDS's Current Report on Form 8-K reporting events on May 4, 2000; and

     4.  TDS's  Report on Form  8-A/A-3  dated May 22,  1998,  which  includes a
     description of TDS's capital stock.

         This Prospectus also  incorporates  by reference  additional  documents
that may be filed by TDS with the SEC  between the date of this  Prospectus  and
the date our offering is completed.

         You may  obtain  copies of such  documents  which are  incorporated  by
reference  in  this  Prospectus  (other  than  exhibits  thereto  which  are not
specifically  incorporated by reference herein), without charge, upon written or
oral request to Investor  Relations,  Telephone  and Data  Systems,  Inc., 30 N.
LaSalle Street,  Suite 4000,  Chicago,  IL 60602,  (312)  630-1900.  In order to
ensure delivery of documents, any request therefor should be made not later than
five business days prior to making an investment decision.

         You should rely only on the  information  contained or  incorporated by
reference in this Prospectus.  We have not authorized anyone to provide you with
information  that is different  from what is contained in this  Prospectus.  You
should not assume that the information  contained in this Prospectus is accurate
as of any date other than the date of such  Prospectus,  and neither the mailing
of this Prospectus to shareholders nor the issuance of any securities  hereunder
shall create any implication to the contrary.  This Prospectus does not offer to
buy or sell securities in any jurisdiction where it is unlawful to do so.


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