TELEPHONE & DATA SYSTEMS INC /DE/
DEF 14A, 2000-04-19
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>
                            SCHEDULE 14A INFORMATION

                  Proxy Statement Pursuant to Section 14(a) of
            the Securities Exchange Act of 1934 (Amendment No.    )

<TABLE>
      <S>        <C>
      Filed by the Registrant /X/
      Filed by a Party other than the Registrant / /

      Check the appropriate box:
      / /        Preliminary Proxy Statement
      / /        Confidential, for Use of the Commission Only (as permitted by Rule
                 14a-6(e)(2))
      /X/        Definitive Proxy Statement
      / /        Definitive Additional Materials
      / /        Soliciting Material Pursuant to Section240.14a-11(c) or
                 Section240.14a-12

                 TELEPHONE AND DATA SYSTEMS, INC.
      ----------------------------------------------------------------------------------
                       (Name of Registrant as Specified In Its Charter)

      ----------------------------------------------------------------------------------
           (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
</TABLE>

Payment of Filing Fee (Check the appropriate box):

/X/  No fee required.
/ /  Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
     and 0-11.
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         -----------------------------------------------------------------------
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/ /  Check box if any part of the fee is offset as provided by Exchange Act
     Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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<PAGE>
TELEPHONE AND DATA SYSTEMS, INC.
30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602
Phone: (312) 630-1900
Fax: (312) 630-1908

                                                                      [TDS LOGO]

                                           April 19, 2000

Dear Fellow Shareholders:

    You are cordially invited to attend our 2000 annual meeting of shareholders
on Friday, May 19, 2000, at 10:00 a.m., Chicago time, at Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois, in the auditorium on
the 8(th) floor. At the meeting, we will report on the plans and accomplishments
of Telephone and Data Systems, Inc.

    The formal notice of the meeting, our board of directors' proxy statement
and our 1999 annual report are enclosed. At our 2000 annual meeting,
shareholders are being asked to take the following regular actions:

    1.  elect four Class I directors; and

    2.  ratify the selection of independent public accountants for the current
       fiscal year.

    The board of directors recommends a vote "FOR" its nominees for election as
directors and "FOR" the proposal to ratify the selection of independent public
accountants.

    In addition, as required by the rules of the SEC, the proxy statement
includes a proposal submitted by a shareholder of TDS. Your board of directors
recommends that you vote "AGAINST" this proposal.

    Our board of directors and members of our management team will be at the
annual meeting to meet with shareholders and discuss our record of achievement
and plans for the future. We would like to have as many shareholders as possible
represented at the meeting. Therefore, please sign and return the enclosed proxy
card(s), whether or not you plan to attend the meeting.

    If you have any questions prior to the annual meeting, please call corporate
relations at (312) 630-1900.

    We look forward to visiting with you at the annual meeting.

                               Very truly yours,

<TABLE>
<S>                                         <C>
[SIGNATURE]                                 [SIGNATURE]

LeRoy T. Carlson                            LeRoy T. Carlson, Jr.
Chairman                                    President and Chief Executive Officer
</TABLE>

                 PLEASE HELP US AVOID THE EXPENSE OF FOLLOW-UP
                       PROXY MAILINGS TO SHAREHOLDERS BY
           SIGNING AND RETURNING THE ENCLOSED PROXY CARD(S) PROMPTLY
<PAGE>
                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                                      AND
                                PROXY STATEMENT

TO THE SHAREHOLDERS OF

                        TELEPHONE AND DATA SYSTEMS, INC.

    The 2000 annual meeting of shareholders of Telephone and Data
Systems, Inc., a Delaware corporation, will be held at Harris Trust and Savings
Bank, 111 West Monroe Street, 8th Floor, Chicago, Illinois, in the auditorium on
Friday, May 19, 2000, at 10:00 a.m., Chicago time, for the following purposes:

    1.  To elect four Class I members of the board of directors. Your board of
       directors recommends that you vote FOR its nominees for Class I director.

    2.  To consider and vote upon a proposal to ratify the selection of Arthur
       Andersen LLP as our independent public accountants for the year ended
       December 31, 2000. Your board of directors recommends that you vote FOR
       this proposal.

    3.  To consider and vote upon a shareholder proposal to request the board of
       directors to require that a substantial majority of the directors do not
       have certain relationships identified in the proposal. Your board of
       directors recommends that you vote AGAINST this proposal.

    4.  To transact such other business as may properly come before the meeting
       or any adjournments thereof.

    We are first mailing this notice of annual meeting and proxy statement to
you on or about April 19, 2000.

                               VOTING INFORMATION

WHAT IS THE RECORD DATE FOR THE MEETING?

    We have fixed the close of business on March 30, 2000, as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
annual meeting or any adjournments thereof.

    A complete list of shareholders entitled to vote at the annual meeting,
arranged in alphabetical order and by voting group, showing the address of and
number of shares held by each shareholder, will be kept open at the offices of
the Company, 30 North LaSalle Street, 40th Floor, Chicago, Illinois 60602, for
examination by any shareholder during normal business hours, for a period of at
least ten days prior to the annual meeting.

WHAT SHARES OF STOCK ENTITLE HOLDERS TO VOTE AT THE MEETING?

    We have the following three classes of stock outstanding, each of which
entitle holders to vote at the meeting:

    - Common Shares;

    - Series A Common Shares; and

    - Preferred Shares.

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

    No public market exists for the Series A Common Shares, but the Series A
Common Shares are convertible on a share-for-share basis into Common Shares.

    No public market exists for the Preferred Shares. The Preferred Shares are
divided into series, some of which are convertible into Common Shares. All
holders of Preferred Shares vote together with the holders of Common Shares and
Series A Common Shares, except in the election of directors. In the election of
directors:

    - the following series of Preferred Shares issued before October 31, 1981
      vote with the holders of Common Shares--Series A, B, D and N; and

    - the following series of Preferred Shares issued after October 31, 1981
      vote together with the holders of Series A Common Shares--Series O, S, DD,
      GG, II, JJ, KK, LL, QQ and TT.

HOW WILL THE DIFFERENT CLASSES OF SHARES VOTE IN THE ELECTION OF DIRECTORS?

    Our board of directors is divided into three classes. Each year, one class
is elected to serve for three years. At our 2000 annual meeting of shareholders,
four Class I directors will be elected for a term of three years or until their
successors are elected and qualified.

    The holders of Series A Common Shares and the holders of the Preferred
Shares issued after October 31, 1981, voting as a group (collectively, the
"Series A Holders"), will be entitled to elect three Class I directors. The
holders of Common Shares and holders of the Preferred Shares issued before
October 31, 1981, voting as a group (collectively, the "Common Holders"), will
be entitled to elect one Class I director.
<PAGE>
    The following shows certain information relating to the outstanding shares
and voting power of such shares as of the record date:

<TABLE>
<CAPTION>
                                                                                                      NUMBER OF     NUMBER OF
                                                                                                      DIRECTORS      CLASS I
                                                                                                      ELECTED BY    DIRECTORS
                                                   OUTSTANDING       VOTES PER         VOTING           VOTING       STANDING
CLASS OF COMMON STOCK                                 SHARES           SHARE           POWER            GROUP      FOR ELECTION
- ---------------------                           ------------------   ---------   ------------------   ----------   ------------
<S>                                             <C>                  <C>         <C>                  <C>          <C>
Series A Common Shares........................           6,958,391      10               69,583,910
Preferred Shares issued after 10/31/81........               4,771       1                    4,771
                                                                                 ------------------
  Series A Holders............................                                           69,588,681        8             3
                                                                                 ==================      ---           ---
Common Shares.................................          53,715,743       1               53,715,743
Preferred Shares issued prior to 10/31/81.....              83,286       1                   83,286
                                                                                 ------------------
  Common Holders..............................                                           53,799,029        4             1
                                                                                 ==================      ---           ---
  Total Directors.............................                                                            12             4
                                                                                                         ===           ===
</TABLE>

HOW WILL THE DIFFERENT CLASSES OF SHARES VOTE WITH RESPECT TO RATIFICATION OF
AUDITORS AND THE SHAREHOLDER PROPOSAL?

    The holders of Series A Common Shares, Common Shares and Preferred Shares
will vote as a group with respect to the ratification of auditors and the
shareholder proposal. Each of the outstanding Common Shares and Preferred Shares
is entitled to one vote and each of the outstanding Series A Common Shares is
entitled to ten votes with respect to these proposals. The following shows
certain information relating to the outstanding shares and voting power of such
shares as of the record date:

<TABLE>
<CAPTION>
                                                             OUTSTANDING       VOTES PER       TOTAL VOTING
CLASS OF COMMON STOCK                                           SHARES           SHARE            POWER           PERCENT
- ---------------------                                     ------------------   ---------   --------------------   --------
<S>                                                       <C>                  <C>         <C>                    <C>
Series A Common Shares..................................           6,958,391      10                 69,583,910     56.4%
Common Shares...........................................          53,715,743       1                 53,715,743     43.5%
Preferred Shares........................................              88,057       1                     88,057      0.1%
                                                                                           --------------------    ------
                                                                                                    123,387,710    100.0%
                                                                                           ====================    ======
</TABLE>

HOW MAY I VOTE IN THE ELECTION OF DIRECTORS?

    COMMON HOLDERS.  The Common Holders may, with respect to the election of the
Class I director to be elected by the Common Holders:

    - vote FOR the election of such director nominee; or

    - WITHHOLD authority to vote for such director nominee.

    Our board of directors recommends a vote FOR its nominee for election as a
Class I director by the Common Holders.

    SERIES A HOLDERS.  The Series A Holders may, with respect to the election of
the Class I directors to be elected by the Series A Holders:

    - vote FOR the election of such director nominees; or

    - WITHHOLD authority to vote for such director nominees.

    Our board of directors recommends a vote FOR its nominees for election as
Class I directors by the Series A Holders.

HOW MAY I VOTE WITH RESPECT TO THE PROPOSAL TO RATIFY THE SELECTION OF ARTHUR
  ANDERSEN?

    A shareholder may, with respect to the proposal to ratify the selection of
Arthur Andersen as our independent public accountants for 2000:

    - vote FOR approval,

    - vote AGAINST approval, or

    - ABSTAIN from voting on such proposal.

    Our board of directors recommends a vote FOR the ratification of the
selection of Arthur Andersen.

                                       2
<PAGE>
HOW MAY I VOTE WITH RESPECT TO THE SHAREHOLDER PROPOSAL?

    A shareholder may, with respect to the shareholder proposal:

    - vote FOR approval,

    - vote AGAINST approval or

    - ABSTAIN from voting on such proposal.

    Our board of directors recommends a vote AGAINST the shareholder proposal.

HOW DOES THE TDS VOTING TRUST INTEND TO VOTE?

    The Voting Trust under Agreement dated June 30, 1989, as amended (the "TDS
Voting Trust") holds 6,359,808 Common Shares, representing approximately 91% of
the Series A Common Shares. By reason of such holding, the TDS Voting Trust has
the voting power to elect all of the directors elected by the Series A Holders
and has approximately 51% of the voting power with respect to matters other than
the election of directors.

    The TDS Voting Trust has advised us that it intends to vote as follows:

    - FOR the board of director's nominees for election as Class I directors by
      the Series A Holders;

    - FOR the proposal to ratify the selection of independent public
      accountants; and

    - AGAINST the shareholder proposal.

    The TDS Voting Trust does not have any votes with respect to directors
elected by the Common Holders.

HOW DO I VOTE?

    Whether or not you intend to be present at the meeting, please sign and mail
your proxy in the enclosed self-addressed envelope to Harris Trust and Savings
Bank, 311 West Monroe Street, Chicago, Illinois 60606. If you hold more than one
class of our shares, you will find enclosed a separate proxy card for each
holding. To assure that all your shares are represented, please return the
enclosed proxy cards, as follows:

    - a proxy printed in black ink for Common Shares, including Common Shares
      owned through the TDS dividend reinvestment plan and through the TDS
      tax-deferred savings plan;

    - a proxy card printed in green ink for Series A Common Shares, including
      Series A Common Shares owned through the dividend reinvestment plan;

    - a proxy card printed in red ink for Preferred Shares issued before
      October 31, 1981; and

    - a proxy card printed in blue ink for Preferred Shares issued after
      October 31, 1981.

HOW WILL PROXIES BE VOTED?

    All properly executed and unrevoked proxies received in the accompanying
form in time for our 2000 annual meeting of shareholders will be voted in the
manner directed on the proxies.

    If no direction is made, a proxy by any shareholder will be voted:

    - FOR the election of the board of directors' nominees to serve as Class I
      directors;

    - FOR the proposal to ratify the selection of Arthur Andersen LLP as our
      independent public accountants for 2000; and

    - AGAINST the shareholder proposal.

    Proxies given pursuant to this solicitation may be revoked at any time prior
to the closing of polls at the annual meeting, by written notice to the
Secretary of TDS or attendance at the annual meeting of shareholders and notice
to the Secretary of such revocation. Proxies may not be revoked after the polls
are closed for voting.

WHAT CONSTITUTES A QUORUM FOR THE MEETING?

    In the election of directors, where a separate vote by a class or classes is
required, the holders of a majority of the votes of the stock of such class or
classes, present in person or represented by proxy, will constitute a quorum
entitled to take action with respect to that vote on the matter.

    The holders of a majority of the votes of the stock issued and outstanding
and entitled to vote, present in person or represented by proxy, will constitute
a quorum at the annual meeting in connection with the ratification of the
selection of Arthur Andersen and the shareholder proposal.

                                       3
<PAGE>
WHAT VOTE IS REQUIRED TO ELECT DIRECTORS?

    COMMON HOLDERS.  The election of the Class I director to be elected by the
Common Holders requires the affirmative vote of holders of a plurality of the
votes of the shares present in person or represented by proxy and entitled to
vote with respect to such director at the annual meeting. Accordingly, if a
quorum exists, the person receiving a plurality of the votes of the Common
Holders with respect to the election of such Class I director will be elected to
serve as a Class I director. A majority of the votes entitled to be cast with
respect to the election of such Class I director by such voting group
constitutes a quorum for action on such proposal. Withheld votes and non-votes
with respect to the election of such Class I director will not affect the
outcome of the election of such director.

    SERIES A HOLDERS.  The election of the Class I directors to be elected by
the Series A Holders requires the affirmative vote of holders of a plurality of
the votes of the shares present in person or represented by proxy and entitled
to vote with respect to such directors at the annual meeting. Accordingly, if a
quorum exists, each person receiving a plurality of the votes of the Series A
Holders with respect to the election of such Class I director will be elected to
serve as a Class I director. A majority of the votes entitled to be cast with
respect to the election of such Class I directors by such voting group
constitutes a quorum for action on such proposal. Withheld and non-votes with
respect to the election of such Class I directors will not affect the outcome of
the election of such Class I directors.

WHAT VOTE IS REQUIRED WITH RESPECT TO THE PROPOSAL TO RATIFY AUDITORS?

    Assuming a quorum exists, the approval of the proposal to ratify the
selection of Arthur Andersen LLP as our independent public accountants for 2000
requires the affirmative vote of a majority of the voting power of all shares of
capital stock of TDS present in person or represented by proxy and entitled to
vote with respect to such matter. A majority of the votes entitled to be cast on
the proposal constitutes a quorum for action on that proposal. Abstentions will
be treated as votes against this proposal. Non-votes will not affect the
determination of whether such proposal is approved for purposes of such vote.

WHAT VOTE IS REQUIRED WITH RESPECT TO THE SHAREHOLDER PROPOSAL?

    Assuming a quorum exists, the approval of the shareholder proposal requires
the affirmative vote of a majority of the voting power of all shares of capital
stock of TDS present in person or represented by proxy and entitled to vote with
respect to such matter. A majority of the votes entitled to be cast on the
proposal constitutes a quorum for action on that proposal. Abstentions will be
treated as votes against this proposal. Non-votes will not affect the
determination of whether such proposal is approved for purposes of such vote.

                                   PROPOSAL 1
                             ELECTION OF DIRECTORS

    The board of directors' nominees for election as Class I directors are
identified in the tables below. In the event any such nominee, who has expressed
an intention to serve if elected, fails to stand for election, the persons named
in the proxy presently intend to vote for a substitute nominee designated by the
board of directors.

                                       4
<PAGE>
NOMINEES

                   CLASS I DIRECTORS-TERMS TO EXPIRE IN 2003

    The following persons, if elected at our 2000 annual meeting of
shareholders, will serve as directors until the 2003 annual meeting of
shareholders or until their successors are elected and qualified:

NOMINEE FOR ELECTION BY COMMON HOLDERS

<TABLE>
<CAPTION>
                                                                POSITION WITH TDS                        SERVED AS
NAME                               AGE                      AND PRINCIPAL OCCUPATION                   DIRECTOR SINCE
- ----                             --------   ---------------------------------------------------------  --------------
<S>                              <C>        <C>                                                        <C>
Martin L. Solomon..............     63      Director of TDS and Chairman and Chief Executive Officer        1997
                                            of American Country Holdings, Inc.
</TABLE>

NOMINEES FOR ELECTION BY SERIES A HOLDERS

<TABLE>
<CAPTION>
                                                                POSITION WITH TDS                        SERVED AS
NAME                               AGE                      AND PRINCIPAL OCCUPATION                   DIRECTOR SINCE
- ----                             --------   ---------------------------------------------------------  --------------
<S>                              <C>        <C>                                                        <C>
James Barr, III................     60      Director of TDS and President and Chief Executive Officer       1990
                                            of TDS Telecommunications Corporation

Sandra L. Helton...............     50      Director and Executive Vice President--Finance and Chief        1998
                                            Financial Officer of TDS

George W. Off..................     53      Director of TDS and Chairman of the board of directors of       1997
                                            Catalina Marketing Corporation
</TABLE>

BACKGROUND OF NOMINEES

    MARTIN L. SOLOMON.  Martin L. Solomon has been chairman and chief executive
officer and a director of American Country Holdings, Inc., an insurance holding
company, since June 1997. Prior to that time, Mr. Solomon had been occupied
primarily as a private investor since 1990. He is the former vice chairman and
director of Great Dane Holdings, Inc. and, in addition to TDS and American
Country Holdings, Inc., is currently the director of three public companies:
XTRA Corporation, a lessor of truck trailers, marine containers and other
equipment; Hexcel Corporation, a manufacturer of composite materials; and MFN
Financial Corp., a finance company. Mr. Solomon is a current Class I director
who was previously elected by the Common Holders.

    JAMES BARR, III.  James Barr, III has been President and Chief Executive
Officer and a director of TDS Telecom, a wholly-owned subsidiary of TDS which
operates local telephone companies, for more than five years. Mr. Barr is also a
director of Aerial Communications, Inc. (Nasdaq Stock Market listing symbol:
"AERL"), a subsidiary of the Company which offers broadband personal
communications services. Mr. Barr is a current Class I director and was
previously elected by the Series A Holders.

    SANDRA L. HELTON.  Sandra L. Helton joined TDS as Executive Vice
President--Finance and Chief Financial Officer in August 1998. Prior to joining
the Company, Ms. Helton was the vice president and corporate controller of
Compaq Computer Corporation between 1997 and 1998. Prior to that time,
Ms. Helton was employed by Corning Incorporated for more than five years. At
Corning Incorporated, Ms. Helton was senior vice president and treasurer between
1994 and 1997 and was vice president and treasurer between 1991 and 1994.
Pursuant to the terms of Ms. Helton's employment letter agreement, dated
August 7, 1998, Ms. Helton was appointed as a Class I director of the board of
directors in November 1998. Ms. Helton is also a director of United States
Cellular Corporation (American Stock Exchange listing symbol: "USM"), a
subsidiary of TDS which operates and invests in cellular telephone companies and
properties, TDS Telecom and Aerial. Ms. Helton is a current Class I director and
was previously elected by the Series A Holders.

    GEORGE W. OFF.  George W. Off was elected as the chairman of the board of
directors of Catalina Marketing Corporation, a New York Stock Exchange listed
company, in July 1998. Mr. Off will retire from this position on July 18, 2000.
Mr. Off served as president and chief executive officer of Catalina from 1994 to
1998. Prior to that, Mr. Off was president and chief operating officer between
1992 and 1994 and its executive vice president between 1990 and 1992. Catalina
is a leading supplier of in-store electronic scanner-activated consumer
promotions. Mr. Off is also a director of Source Information Management Co., a
provider of information and management services for retail magazine sales.
Mr. Off is a current Class I director and was previously elected by the
Series A Holders.

    THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE NOMINEES FOR
DIRECTOR.

                                       5
<PAGE>
    The following additional information is provided in connection with Proposal
1.

                                OTHER DIRECTORS
                   CLASS II DIRECTORS-TERMS TO EXPIRE IN 2001

    The following persons are current Class II directors whose terms will expire
at the 2001 annual meeting of shareholders:

ELECTED BY COMMON HOLDERS

<TABLE>
<CAPTION>
                                                                POSITION WITH TDS                        SERVED AS
NAME                               AGE                      AND PRINCIPAL OCCUPATION                   DIRECTOR SINCE
- ----                             --------   ---------------------------------------------------------  --------------
<S>                              <C>        <C>                                                        <C>
Kevin A. Mundt.................     46      Director of TDS and Director and Vice President of Mercer       1997
                                            Management Consulting

Murray L. Swanson..............     59      Director of TDS and Managing Director of Sonera                 1983
                                            Corporation U.S.
</TABLE>

ELECTED BY SERIES A HOLDERS

<TABLE>
<CAPTION>
                                                                POSITION WITH TDS                        SERVED AS
NAME                               AGE                      AND PRINCIPAL OCCUPATION                   DIRECTOR SINCE
- ----                             --------   ---------------------------------------------------------  --------------
<S>                              <C>        <C>                                                        <C>
LeRoy T. Carlson, Jr...........     53      Director and President of TDS (Chief Executive Officer)         1968

Donald C. Nebergall............     71      Director and Consultant to TDS and other companies              1977
</TABLE>

BACKGROUND OF CLASS II DIRECTORS

    KEVIN A. MUNDT.  Kevin A. Mundt has been director and vice president of
Mercer Management Consulting, a management consulting firm, since 1997. Prior to
that time, he was a co-founder, and had been a director since 1984, of Corporate
Decisions, Inc., a strategy consulting firm, which merged with Mercer Management
Consulting in 1997.

    MURRAY L. SWANSON.  Murray L. Swanson has been the managing director of
Sonera Corporation U.S., a subsidiary of Sonera Corporation, a
telecommunications company organized under the laws of Finland, since
October 1998. Prior to the appointment of Ms. Helton as TDS's Executive Vice
President--Finance and Chief Financial Officer in August 1998, Mr. Swanson was
TDS's Executive Vice President--Finance and Chief Financial Officer for more
than five years. Pursuant to an employment agreement, Mr. Swanson continued to
be employed by TDS until December 1998, at which time he retired from TDS. The
employment agreement permitted Mr. Swanson to accept employment with Sonera
prior to his retirement date with TDS. Mr. Swanson served as a director of U.S.
Cellular, Aerial and TDS Telecom until his resignation from the board of
directors of TDS Telecom in September 1998 and the Board of Directors of each of
U.S. Cellular and Aerial in October 1998.

    Mr. Swanson has agreed to resign as a director of TDS effective as of the
closing of the reorganization between Aerial and VoiceStream Wireless
Corporation. The Board of Directors intends to seek a qualified person to fill
the vacancy created by the resignation of Mr. Swanson.

    LEROY T. CARLSON, JR.  LeRoy T. Carlson, Jr., has been TDS's President and
Chief Executive Officer for more than five years. Mr. LeRoy T. Carlson, Jr. is
also Chairman and a director of U.S. Cellular, Aerial and TDS Telecom.
Mr. LeRoy T. Carlson, Jr. is the son of Mr. LeRoy T. Carlson and the brother of
Mr. Walter C. D. Carlson and Dr. Letitia G. C. Carlson.

    DONALD C. NEBERGALL.  Donald C. Nebergall has been a consultant to TDS and
other companies since 1988. Mr. Nebergall was vice president of The Chapman
Company, a registered investment advisory company located in Cedar Rapids, Iowa,
from 1986 to 1988. Prior to that, he was the chairman of Brenton Bank & Trust
Company, Cedar Rapids, Iowa, from 1982 to 1986, and was its president from 1972
to 1982.

                                       6
<PAGE>
                  CLASS III DIRECTORS-TERMS TO EXPIRE IN 2002

    The following persons are current Class III directors whose terms will
expire at the 2002 annual meeting of shareholders:

ELECTED BY COMMON HOLDERS

<TABLE>
<CAPTION>
                                                                POSITION WITH TDS                        SERVED AS
NAME                               AGE                      AND PRINCIPAL OCCUPATION                   DIRECTOR SINCE
- ----                             --------   ---------------------------------------------------------  --------------
<S>                              <C>        <C>                                                        <C>
Herbert S. Wander..............     65      Director of TDS and Partner, Katten Muchin Zavis,               1968
                                            Chicago, Illinois
</TABLE>

ELECTED BY SERIES A HOLDERS

<TABLE>
<CAPTION>
                                                                POSITION WITH TDS                        SERVED AS
NAME                               AGE                      AND PRINCIPAL OCCUPATION                   DIRECTOR SINCE
- ----                             --------   ---------------------------------------------------------  --------------
<S>                              <C>        <C>                                                        <C>
LeRoy T. Carlson...............     83      Director and Chairman of TDS                                    1968

Walter C. D. Carlson...........     46      Director of TDS and Partner, Sidley & Austin, Chicago,          1981
                                            Illinois

Letitia G. C. Carlson..........     39      Director of TDS, Physician and Assistant Professor at           1996
                                            George Washington University Medical Center
</TABLE>

BACKGROUND OF CLASS III DIRECTORS

    HERBERT S. WANDER.  Herbert S. Wander has had the principal occupation
indicated for more than five years.

    LEROY T. CARLSON.  LeRoy T. Carlson has had the principal occupation
indicated for more than five years. He is a director of U.S. Cellular and
Aerial. LeRoy T. Carlson is the father of LeRoy T. Carlson, Jr. and Walter C. D.
Carlson and Dr. Letitia G. C. Carlson.

    WALTER C. D. CARLSON.  Walter C. D. Carlson had the principal occupation
indicated for more than five years. He is a director of U.S. Cellular and
Aerial. Walter C. D. Carlson is the son of LeRoy T. Carlson and the brother of
LeRoy T. Carlson, Jr. and Dr. Letitia G. C. Carlson. The law firm of Sidley &
Austin provides legal services to TDS and its subsidiaries on a regular basis.

    LETITIA G. C. CARLSON.  Dr. Letitia G. C. Carlson has had the principal
occupation indicated for more than five years. Dr. Carlson is the daughter of
LeRoy T. Carlson and the sister of LeRoy T. Carlson, Jr. and Walter C. D.
Carlson.

COMMITTEES AND MEETINGS

    The board of directors held seven meetings during 1999. Each person who was
a director during all of 1999 attended at least 75% of the meetings, except that
Kevin A. Mundt attended five of seven meetings.

    The audit committee of the board of directors, among other things,
determines audit policies, reviews external and internal audit reports and
reviews recommendations made by our internal auditing staff and independent
public accountants. The current members of the audit committee are:
Messrs. Walter C. D. Carlson (Chairman), George W. Off and Herbert S. Wander.
The audit committee held five meetings in 1999. Each person who was a member of
the audit committee during 1999 attended at least 75% of the meetings.

    The stock option compensation committee approves the annual salary, bonus
and other cash compensation for the President, considers and approves long-term
compensation for executive officers and considers and recommends to the board of
directors any changes to long-term compensation plans or policies. The current
members of the stock option compensation committee are: Mr. George W. Off
(Chairman) and Dr. Letitia G. C. Carlson. All meetings and other actions of the
stock option compensation committee in 1999 were attended or taken by both
members of the committee.

    The primary function of the compensation committee is to approve the annual
salary, bonus and other cash compensation of officers and key employees of TDS
other than the President. The sole member of the compensation committee is LeRoy
T. Carlson, Jr., President of TDS. All actions of the compensation committee are
taken by written consent.

    In late 1998, the board of directors established a special committee
consisting of all directors of TDS other than Mr. Murray L. Swanson. The special
committee was authorized to consider various alternatives with respect to TDS's
investment in Aerial, including a spin-off of Aerial, and to make its
recommendation to the TDS board of

                                       7
<PAGE>
directors. The TDS board of directors believed that the consideration of such
alternatives may involve confidential and privileged information relating to
TDS's investment in Aerial, which might involve a conflict of interest with
Sonera Corporation. Because Mr. Swanson is the managing director of Sonera
Corporation U.S., a subsidiary of Sonera Corporation, the board of directors
determined that it would be desirable to establish a committee consisting of all
directors other than Mr. Swanson to consider such alternatives. The special
committee held five meetings in 1999. All the members of the special committee
attended at least 75% of the meetings held in 1999, except that George W. Off
attended two of the five meetings.

                               EXECUTIVE OFFICERS

    In addition to the executive officers identified in the tables regarding the
election of directors, set forth below is a table identifying current officers
of TDS and its subsidiaries who may be deemed to be executive officers of TDS
for disclosure purposes under the rules of the SEC. Unless otherwise indicated,
the position held is an office of TDS.

<TABLE>
<CAPTION>
NAME                                     AGE                                POSITION
- ----                                   --------                             --------
<S>                                    <C>        <C>
John E. Rooney.......................     57      President and CEO of United States Cellular Corporation
Donald W. Warkentin..................     44      President and CEO of Aerial Communications, Inc.
Scott H. Williamson..................     49      Senior Vice President--Acquisitions and Corporate
                                                  Development
Thomas A. Burke......................     46      Vice President and Chief Information Officer
Michael K. Chesney...................     44      Vice President--Corporate Development
George L. Dienes.....................     69      Vice President--Corporate Development
C. Theodore Herbert..................     64      Vice President--Human Resources
Rudolph E. Hornacek..................     72      Vice President--Engineering
D. Michael Jack......................     57      Vice President and Corporate Controller
Peter L. Sereda......................     41      Vice President and Treasurer
Mark A. Steinkrauss..................     54      Vice President--Corporate Relations
Edward W. Towers.....................     52      Vice President--Corporate Development Operations
James W. Twesme......................     47      Vice President--Corporate Finance and Assistant Treasurer
Byron A. Wertz.......................     53      Vice President--Corporate Development
Gregory J. Wilkinson.................     49      Vice President and Secretary
Michael G. Hron......................     55      General Counsel and Assistant Secretary
</TABLE>

BACKGROUND TO EXECUTIVE OFFICERS

    JOHN E. ROONEY.  John E. Rooney succeeded H. Donald Nelson as President and
Chief Executive Officer of U.S. Cellular as of April 10, 2000. Mr. Rooney has
also been nominated for election as a director of U.S. Cellular. Mr. Rooney was
previously employed by Ameritech Corporation for more than five years. Between
1996 and 1999, he was President, Ameritech Consumer Services; between 1992 and
1996 he was President, Ameritech Cellular Services; and between 1990 and 1992 he
was Vice President and Treasurer of Ameritech Corporation.

    DONALD W. WARKENTIN.  Donald W. Warkentin was appointed a director and
President and Chief Executive Officer of Aerial in 1995. Prior to that time,
Mr. Warkentin was vice president of multimedia marketing for US West
Communications from 1994 to 1995. Before that, Mr. Warkentin was head of
marketing for Mercury One-2-One in the United Kingdom, the world's first PCS
venture.

    SCOTT H. WILLIAMSON.  Scott H. Williamson was appointed Senior Vice
President--Acquisitions and Corporate Development of TDS in February 1998. Prior
to that time, he was Vice President--Acquisitions of TDS since 1995. Immediately
before joining TDS, Mr. Williamson was vice president, corporate development of
FMC Corporation, a manufacturer of machinery and chemicals, between 1993 and
1995.

    THOMAS A. BURKE.  Thomas A. Burke was appointed Vice President and Chief
Information Officer as of April 1, 2000. Prior to that time, he was employed by
TDS for more than five years, most recently as President of TDS Computing
Services, a division of TDS.

    MICHAEL K. CHESNEY.  Michael K. Chesney was appointed a Vice
President--Corporate Development of TDS in 1994. Prior to that, he was Director
of Corporate Development of TDS for more than five years.

    GEORGE L. DIENES.  George L. Dienes has been a Vice President--Corporate
Development of TDS for more than five years.

    C. THEODORE HERBERT.  C. Theodore Herbert has been Vice President--Human
Resources of TDS for more than five years.

                                       8
<PAGE>
    RUDOLPH E. HORNACEK.  Rudolph E. Hornacek has been Vice
President--Engineering of TDS for more than five years. He was a director of TDS
until his resignation in November 1998. He is currently director emeritus of
TDS. Mr. Hornacek is a director of TDS Telecom and Aerial.

    D. MICHAEL JACK.  D. Michael Jack was appointed Vice President and Corporate
Controller of TDS in November 1999. Prior to joining TDS, Mr. Jack was employed
by Cummins Engine Company, Inc. for more than five years. At Cummins Engine
Company, Mr. Jack was executive director of its financial services division
between 1998 to 1999; chief financial officer of the industrial business unit
between 1996 to 1998; and division controller of worldwide operations prior to
1996.

    PETER L. SEREDA.  Peter L. Sereda was appointed Vice President and Treasurer
of TDS in February 1998. Prior to joining TDS, he was employed by Specialty
Foods Corporation, a privately held company which produces meat and bakery
products, between 1994 and 1998. At Specialty Foods Corporation, Mr. Sereda was
vice president of finance-operations between 1997 and 1998, and was vice
president and treasurer between 1994 and 1997.

    MARK A. STEINKRAUSS.  Mark A. Steinkrauss was appointed Vice
President--Corporate Relations of TDS in March 1998. Prior to joining TDS,
Mr. Steinkrauss was employed by Fruit of the Loom, Inc., an international
apparel company, for more than five years, most recently as vice president of
corporate relations.

    EDWARD W. TOWERS.  Edward W. Towers was appointed Vice President--Corporate
Development Operations of TDS in 1997. Immediately prior thereto, Mr. Towers was
Vice President--Market and Business Development of U.S. Cellular for more than
five years.

    JAMES W. TWESME.  James W. Twesme was appointed Vice President--Corporate
Finance of TDS in January 1999. Prior to that time, he was Assistant Treasurer
of TDS for more than five years.

    BYRON A. WERTZ.  Byron A. Wertz was appointed a Vice President--Corporate
Development of TDS in 1994. Prior to that, he was Director--Telecommunications
Development of TDS for more than five years. Mr. Wertz is the nephew of LeRoy T.
Carlson and the cousin of each of LeRoy T. Carlson, Jr., Walter C. D. Carlson
and Dr. Letitia G. C. Carlson.

    GREGORY J. WILKINSON.  Gregory J. Wilkinson was appointed Vice President and
Secretary of TDS in November 1999. Prior to that time, he was the Vice President
and Controller of TDS for more than five years.

    MICHAEL G. HRON.  Michael G. Hron was appointed General Counsel and
Assistant Secretary of TDS in November 1999. Prior to that time, he was the
Secretary of TDS for more than five years. He was also appointed General Counsel
and Assistant Secretary of U.S. Cellular in December 1999. He has been a partner
at the law firm of Sidley & Austin for more than five years. Sidley & Austin
provided legal services to TDS and its subsidiaries in 1999.

    All of TDS's executive officers devote substantially all their time to TDS
or its subsidiaries, except for Michael G. Hron who is a practicing attorney.

                             EXECUTIVE COMPENSATION

SUMMARY OF COMPENSATION

    The following table summarizes the compensation paid by TDS to the President
and chief executive officer of TDS and the four most highly compensated
executive officers (based on the aggregate of the salary and bonus for 1999) in
addition to the President and chief executive officer.

                                       9
<PAGE>
                         SUMMARY COMPENSATION TABLE(1)

<TABLE>
<CAPTION>
                                                                                  LONG-TERM COMPENSATION
                                                                         ----------------------------------------
                                                                                    AWARDS              PAYOUTS
                                           ANNUAL COMPENSATION           ----------------------------  ----------
                                   ------------------------------------  RESTRICTED     SECURITIES
                                                         OTHER ANNUAL       STOCK       UNDERLYING        LTIP        ALL OTHER
NAME AND PRINCIPAL POSITION  YEAR  SALARY(2)  BONUS(3)  COMPENSATION(4)  AWARD(S)(5)  OPTIONS/SARS(6)  PAYOUTS(7)  COMPENSATION(8)
- ---------------------------  ----  ---------  --------  ---------------  -----------  ---------------  ----------  ---------------
<S>                          <C>   <C>        <C>       <C>              <C>          <C>              <C>         <C>
LeRoy T. Carlson.........    1999  $458,000   $     --           --              --        17,600             --       $65,072
  Chairman                   1998   418,000    196,000      $56,840              --        57,420             --        70,019
                             1997   381,000    160,000           --              --         8,295             --        67,956

LeRoy T. Carlson, Jr.....    1999  $630,000   $     --           --              --        27,850             --       $27,619
  President (Chief           1998   570,000    310,000      $72,500              --        81,900             --        28,287
  Executive Officer)         1997   515,000    270,000           --              --        11,770             --        22,894

Sandra L. Helton.........    1999  $381,000   $270,000           --              --            --             --       $89,423
  Executive Vice             1998   107,889     84,000           --      $  101,625        30,000             --        21,446
  President--Finance (Chief  1997        --         --           --              --            --             --            --
  Financial Officer)

James Barr III...........    1999  $384,000   $203,000           --              --            --             --       $31,426
  President of TDS           1998   359,000    112,500           --              --            --       $327,410        34,108
  Telecommunications         1997   325,000    183,500           --              --            --             --        34,777
  Corporation

H. Donald Nelson(9)......    1999  $414,209   $275,000      $80,204      $  530,156        17,000             --       $35,748
  President of United        1998   371,589    232,000           --       1,108,006        17,000             --        39,788
  States Cellular            1997   337,709    135,000        8,438         254,837        25,178             --        34,468
  Corporation
</TABLE>

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

(1) Does not include the discount amount under any dividend reinvestment plan or
    any employee stock purchase plan because such plans are generally available
    to all eligible shareholders or salaried employees, respectively. Does not
    include the value of any perquisites and other personal benefits, securities
    or property because the aggregate amount of such compensation is less than
    the lesser of either $50,000 or 10% of the total of annual salary and bonus
    reported for the above-named executive officers.

(2) Represents the dollar value of base salary (cash and non-cash) earned by the
    named executive officer during the fiscal year identified.

(3) Represents the dollar value of bonus (cash and non-cash) earned (whether
    received in cash or deferred) by the named executive officer for 1999, 1998
    and 1997. However, bonuses for 1999 have not yet been determined for
    Messrs. LeRoy T. Carlson and LeRoy T. Carlson, Jr. and such persons have not
    received advance payments of any part of the 1999 bonus. See "Executive
    Officer Compensation Report."

(4) Represents the fair market value of phantom stock units credited to such
    officer with respect to deferred bonus compensation. See "Bonus Deferral and
    Stock Unit Match." Messrs. LeRoy T. Carlson and LeRoy T. Carlson, Jr. have
    deferred 100% of their 1998 bonuses and Mr. LeRoy T. Carlson elected to
    defer 100% of his 1999 bonus pursuant to the TDS 1999 Long-Term Incentive
    Plan. Because the bonus for 1999 has not yet been determined for Mr. LeRoy
    T. Carlson, the dollar value of the Company match phantom stock units cannot
    be determined at this time for such person. In addition, Mr. Nelson has
    deferred 100% of his bonus pursuant to a similar plan provided by U.S.
    Cellular and has received phantom stock units of USM Common Shares.

(5) With respect to Ms. Helton, represents the value of 3,000 restricted Common
    Shares granted to Ms. Helton based on the closing price of Common Shares on
    the date of grant. With respect to Mr. Nelson, represents the value of bonus
    and restricted USM Common Shares granted to Mr. Nelson, based on the closing
    price of USM Common Shares on the date of grant.

(6) Represents the number of shares subject to stock options and/or stock
    appreciation rights ("SARs") awarded during the fiscal year identified.
    Unless otherwise indicated by footnote, the awards represent options without
    tandem SARs and relate to TDS Common Shares. In the case of H. Donald
    Nelson, the amounts represent the number of USM shares subject to options
    and/or SARs awarded during the fiscal year identified.

(7) In 1998, Mr. Barr exercised options for an aggregate of 106,960 phantom
    stock units for 1995, 1996 and 1997, and received a net cash payment, prior
    to withholding taxes, of $327,410. See "TDS Telecom Phantom Incentive Option
    Plan."

(8) Includes contributions by the Company for the benefit of the named executive
    officer under the TDS tax-deferred savings plan ("TDSP"), the TDS employees'
    pension trust or the TDS wireless companies' pension plan ("Pension Plan"),
    including earnings accrued under a related supplemental benefit agreement,
    the TDS supplemental executive retirement plan ("SERP"), the dollar value of
    any insurance premiums

                                       10
<PAGE>
    paid during the covered fiscal year with respect to life insurance for the
    benefit of the named executive ("Life Insurance"), and reimbursement of
    moving expenses ("Moving Expenses"), as indicated below for 1999:

<TABLE>
<CAPTION>
                                                              LEROY T.     LEROY T.     SANDRA L.                    H. DONALD
                                                              CARLSON    CARLSON, JR.    HELTON     JAMES BARR III     NELSON
                                                              --------   ------------   ---------   --------------   ----------
<S>                                                           <C>        <C>            <C>         <C>              <C>
    TDSP....................................................  $ 2,880      $ 2,880       $ 2,800       $    --        $ 4,800
    Pension Plan............................................   27,465        7,539         2,990        15,155          7,422
    SERP....................................................   30,000       15,590         6,763        14,845         22,578
    Life Insurance..........................................    4,727        1,610           869         1,426            948
    Moving Expenses.........................................       --           --        76,001            --             --
                                                              -------      -------       -------       -------        -------
      Total.................................................  $65,072      $27,619       $89,423       $31,426        $35,748
                                                              =======      =======       =======       =======        =======
</TABLE>

(9) All of Mr. Nelson's compensation is paid by U.S. Cellular. Mr. Nelson's
    annual compensation is approved by LeRoy T. Carlson, Jr., the Chairman of
    U.S. Cellular, and Mr. Nelson's long-term compensation is approved by the
    stock option compensation committee of U.S. Cellular. Mr. Nelson stepped
    down as President and Chief Executive Officer of U.S. Cellular on April 9,
    2000. TDS and U.S. Cellular expect to finalize a retirement agreement with
    Mr. Nelson in the near term.

GENERAL INFORMATION REGARDING OPTIONS AND SARS

    The following tables show, as to the executive officers who are named in the
Summary Compensation Table, information regarding options and/or SARs.

                      INDIVIDUAL OPTION/SAR GRANTS IN 1999

<TABLE>
<CAPTION>
                                                                                                       POTENTIAL REALIZABLE
                                                                                                             VALUE AT
                                                                                                          ASSUMED ANNUAL
                                      NUMBER OF                                                        REALIZED STOCK PRICE
                                      SECURITIES     % OF TOTAL                                            APPRECIATION
                                      UNDERLYING    OPTIONS/SARS                                        FOR OPTION TERMS(4)
                                     OPTIONS/SARS    GRANTED TO    EXERCISE    MARKET    EXPIRATION   -----------------------
NAME                                  GRANTED(1)    EMPLOYEES(2)    PRICE     PRICE(3)      DATE          5%          10%
- ----                                 ------------   ------------   --------   --------   ----------   ----------   ----------
<S>                                  <C>            <C>            <C>        <C>        <C>          <C>          <C>
LeRoy T. Carlson(5)................     17,600          14.1%       $66.75     $66.75      5/14/09    $  738,825   $1,872,323

LeRoy T. Carlson, Jr.(5)...........     27,850          22.4%       $66.75     $66.75      5/14/09    $1,169,107   $2,962,738

H. Donald Nelson(6)................     17,000           9.9%       $44.00     $44.00      3/31/09    $  470,413   $1,192,119
</TABLE>

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

(1) Represents the number of TDS shares underlying options awarded during the
    year, except in the case of H. Donald Nelson, in which case the amount
    represents the number of USM shares underlying options or SARs awarded
    during the fiscal year.

(2) Represents the percent of total TDS shares underlying options awarded to all
    TDS employees during the fiscal year, except for H. Donald Nelson, in which
    case the percentage represents the percent of total USM shares underlying
    the total options awarded to all USM employees during the fiscal year.

(3) Represents the fair market value of shares as of the award date.

(4) Represents the potential realizable value of each grant of options, assuming
    that the market price of the shares underlying the options appreciates in
    value from the award date to the end of the Option term at the indicated
    annualized rates.

(5) Pursuant to the TDS long-term incentive plan, on May 14, 1999, such named
    executive officers were granted options (the "1998 Performance Options") to
    purchase TDS Common Shares based on the achievement of certain levels of
    corporate and individual performance in 1998 as contemplated by the TDS
    long-term incentive plan. The purchase price per TDS Common Share subject to
    the 1998 Performance Options is the average of the closing price of the TDS
    Common Shares on the American Stock Exchange for the 20 trading days ended
    on the trading day immediately preceding the grant date. The 1998
    Performance Options became exercisable on December 15, 1999.

(6) It is expected that such USM options will become exercisable upon
    Mr. Nelson's retirement, at the exercise price of $44.00 per share.

                                       11
<PAGE>
                  AGGREGATED OPTION/SAR EXERCISES IN 1999, AND
                       DECEMBER 31, 1999 OPTION/SAR VALUE

<TABLE>
<CAPTION>
                                                                                         AS OF DECEMBER 31, 1999
                                                                         --------------------------------------------------------
                                                                            NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                     1999                 UNDERLYING UNEXERCISABLE            IN-THE-MONEY
                                         -----------------------------         OPTIONS/SARS(3)              OPTIONS/SARS(4)
                                         SHARES ACQUIRED      VALUE      ---------------------------   --------------------------
NAME                                     ON EXERCISE(1)    REALIZED(2)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISED
- ----                                     ---------------   -----------   -----------   -------------   -----------   ------------
<S>                                      <C>               <C>           <C>           <C>             <C>           <C>
LeRoy T. Carlson
  1998 Performance Options(5)..........                                     17,600            --       $ 1,042,800    $       --
  1998 Automatic Options(6)............                                     26,400        13,200         2,171,400     1,085,700
  1997 Performance Options(7)..........                                     17,820            --         1,536,975            --
  1996 Performance Options(8)..........                                      8,295            --           681,185            --
  1995 Performance Options(9)..........                                      9,367            --           734,373            --
  1994 Performance Options(10).........                                      9,476            --           832,751            --
  1994 Automatic Options(11)...........                                     36,050            --         2,826,681            --
                                                                           -------        ------       -----------    ----------
    Total..............................                                    125,008        13,200       $ 9,826,165    $1,085,700
                                                                           =======        ======       ===========    ==========
LeRoy T. Carlson, Jr.
  1998 Performance Options(5)..........                                     27,850            --       $ 1,650,113    $       --
  1998 Automatic Options(6)............                                     36,400        18,200         2,993,900     1,496,950
  1997 Performance Options(7)..........                                     27,300            --         2,354,625            --
  1996 Performance Options(8)..........                                     11,770            --           966,552            --
  1995 Performance Options(9)..........                                     13,233            --         1,037,467            --
  1994 Performance Options(10).........                                     13,114            --         1,152,458            --
  1994 Automatic Options(11)...........                                     47,100            --         3,693,111            --
  1988 Options(12).....................       80,879       $3,145,384           --            --                --            --
                                                                           -------        ------       -----------    ----------
    Total..............................                                    176,767        18,200       $13,848,226    $1,496,950
                                                                           =======        ======       ===========    ==========
Sandra L. Helton(13)...................                                     24,000        12,000       $ 2,211,120    $1,105,560
                                                                           =======        ======       ===========    ==========
James Barr III
  1990 Options(14).....................                                     20,000            --       $ 1,720,000    $       --
                                                                           =======        ======       ===========    ==========
H. Donald Nelson(15)
  USM 1999 Automatic Options(16).......           --       $       --           --        17,000       $        --    $  967,980
  USM 1998 Automatic Options(17).......        3,400          221,204           --        13,600                --       911,200
  USM 1997 Automatic Options(18).......        6,800          501,819           --        10,200                --       772,038
  USM 1996 Performance Options(19).....        8,178          630,635           --            --                --            --
  USM 1995 Performance Options(20).....        7,960          506,629           --            --                --            --
  USM 1994 Performance Options(21).....        9,136          517,500           --            --                --            --
  USM 1994 Automatic Options(22).......       28,200          742,946           --            --                --            --
  USM SARs(23).........................       26,400          932,888           --         9,600                --       825,024
                                             -------       ----------      -------        ------       -----------    ----------
    Total..............................       90,074       $4,053,621           --        50,400       $        --    $3,476,242
                                             =======       ==========      =======        ======       ===========    ==========
</TABLE>

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

(1) Represents the number of TDS Common Shares with respect to which the options
    or SARs were exercised or, in the case of H. Donald Nelson, USM Common
    Shares.

(2) Represents the aggregate dollar value realized upon exercise, based on the
    difference between the exercise price and the fair market value of the
    shares on the date of exercise.

(3) Represents the number of TDS Common Shares subject to options and/or SARs,
    except for H. Donald Nelson, in which case the information is presented with
    respect to USM shares. All options are transferable to permitted
    transferees.

(4) Represents the aggregate dollar value of in-the-money, unexercised options
    and SARs held at the end of the fiscal year, based on the difference between
    the exercise price and $126.00, the market value of TDS Common Shares on
    December 31, 1999 or, with respect to options for USM shares, $100.94, the
    market value of USM Common Shares on December 31, 1999.

(5) Such options became exercisable on December 15, 1999 and are exercisable
    until May 14, 2009 at the exercise price of $66.75 per share.

(6) Such options became exercisable with respect to one-third of the shares on
    each of December 15, 1998 and December 15, 1999 and will become exercisable
    with respect to one-third of the shares on December 15, 2000, and are
    exercisable until November 5, 2007 at the exercise price of $43.75 per
    share.

(7) Such options became exercisable on December 15, 1998 and are exercisable
    until June 22, 2008 at the exercise price of $39.75 per share.

(8) Such options became exercisable on December 15, 1997 and are exercisable
    until December 15, 2007 at the exercise price of $43.88 per share.

                                       12
<PAGE>
(9) Such options became exercisable on December 15, 1996 and are exercisable
    until December 15, 2006 at the exercise price of $47.60 per share.

(10) Such options became exercisable on December 15, 1995 and are exercisable
    until December 15, 2005 at the exercise price of $38.12 per share.

(11) Such options became exercisable in annual increments of 20% on each of
    December 15, 1995 and on the first through the fourth anniversaries of such
    date, and are exercisable until November 4, 2004 at the exercise price of
    $47.59 per share.

(12) Options for a total of 127,500 shares were granted on March 14, 1988 to
    become exercisable with respect to 12,750 shares on March 14 of each year
    between 1989 through 1998.

(13) Such options became exercisable with respect to 12,000 shares on
    December 15, 1998 and 1999 and will become exercisable with respect to
    12,000 shares on December 15, 2000, and are exercisable until September 15,
    2008 at an exercise price of $33.87 per share.

(14) The 1990 Options were granted on January 15, 1990, became exercisable with
    respect to 2,000 shares on January 15 of each year between 1991 through
    2000, and are exercisable until January 15, 2001 at the exercise price of
    $40.00 per share.

(15) Mr. Nelson stepped down as President and Chief Executive Officer on
    April 9, 2000. It is expected that all unvested options held by Mr. Nelson
    will become fully vested and exercisable upon his retirement from U.S.
    Cellular.

(16) The USM 1999 Automatic Options were originally scheduled to become
    exercisable in annual increments of 20% on March 31 of each year beginning
    in 2000 and ending in 2004, and were exercisable until March 31, 2009 at the
    exercise price of $44.00 per share.

(17) The USM 1998 Automatic Options were originally scheduled to become
    exercisable in annual increments of 20% on March 31 of each year beginning
    in 1999 and ending in 2003, and were exercisable until March 31, 2008 at the
    exercise price of $33.94 per share.

(18) The USM 1997 Automatic Options were originally scheduled to become
    exercisable in annual increments of 20% on March 31 of each year beginning
    in 1998 and ending in 2002, and were exercisable until May 14, 2007 at the
    exercise price of $25.25 per share.

(19) The USM 1996 Performance Options became exercisable on December 15, 1997
    and were exercisable until May 1, 2007 at the exercise price of $24.48 per
    share.

(20) The USM 1995 Performance Options became exercisable on December 15, 1996
    and were exercisable until May 1, 2006 at the exercise price of $34.60 per
    share.

(21) The USM 1994 Performance Options became exercisable on December 15, 1995
    and were exercisable until May 1, 2005 at the exercise price of $29.33 per
    share.

(22) The USM 1994 Automatic Options became exercisable in annual increments of
    20% on each of December 15, 1994, and on the first through the fourth
    anniversaries of such date, and were exercisable until November 9, 2004 at
    the exercise price of $32.25 per share.

(23) The USM SARs were granted in 1988 and are exercisable at the exercise price
    of $15.00 per share.

TDS TELECOM PHANTOM INCENTIVE OPTION PLAN

    Mr. James Barr III participates in the TDS Telecom phantom stock incentive
plan (the "TDS Telecom Plan"). The TDS Telecom Plan was adopted by TDS Telecom
in 1997 and relates to the five-year period beginning on January 1, 1995. Under
the TDS Telecom Plan, Mr. Barr was awarded certain phantom stock units by the
Chairman of TDS Telecom. The award consists of automatic awards and performance
awards. The automatic awards vest in five equal annual installments beginning on
December 15, 1995. The performance awards include a corporate performance award
and an individual performance award. The performance awards vest on December 15
of the year following the performance year to which they relate. When vested,
the phantom stock option units may be exercised at an exercise price determined
in accordance with the terms of the plan. All phantom stock unit options expire
on July 1, 2003. Upon exercise of the phantom stock units, Mr. Barr will receive
a cash payment equal to the difference between the exercise price and the
implied value of the phantom stock unit as provided in the TDS Telecom Plan. In
1998, Mr. Barr exercised options for an aggregate of 106,960 phantom stock units
for 1995, 1996 and 1997, and received a net cash payment, prior to withholding
taxes, of $327,410. See "Summary Compensation Table."

    The following table summarizes the award of options for phantom stock units
to Mr. Barr in 1999:

           TDS TELECOM PHANTOM STOCK PLAN-AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                    ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
                                                        PERFORMANCE OR OTHER                  PRICE-BASED PLANS(3)
                          NUMBER OF SHARES, UNITS              PERIOD               -----------------------------------------
NAME                        OR OTHER RIGHTS(1)      UNTIL MATURATION OR PAYOUT(2)   THRESHOLD (#)   TARGET (#)   MAXIMUM (#)
- ----                      -----------------------   -----------------------------   -------------   ----------   ------------
<S>                       <C>                       <C>                             <C>             <C>          <C>
James Barr III..........          40,636                         1998                     -0-         22,558        67,674
</TABLE>

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

(1) Represents the number of performance phantom stock option units which were
    granted with respect to 1998.

                                       13
<PAGE>
(2) Represents the fiscal year to which such phantom stock units relate.

(3) The minimum threshold number is zero since no performance options may be
    granted if threshold performance is not achieved. The target and maximum
    numbers represent the additional units which may be awarded at target or
    maximum performance, respectively.

PENSION PLANS AND SUPPLEMENTAL BENEFIT AGREEMENTS

    The TDS employees' pension trust (the "TDS Pension Plan") is a defined
contribution plan designed to provide retirement benefits for eligible employees
of the Company and certain of its affiliates which adopt the TDS Pension Plan.
Annual employer contributions based upon actuarial assumptions are made under a
formula designed to fund a target pension benefit for each participant
commencing generally upon the participant's attainment of retirement age. The
amounts of the annual contributions are included above in the Summary
Compensation Table under "All Other Compensation."

    U.S. Cellular has adopted the TDS wireless companies' pension plan (the
"Wireless Pension Plan"). The Wireless Pension Plan, a qualified
non-contributory defined contribution pension plan, provides pension benefits
for employees of U.S. Cellular. Under the Wireless Pension Plan, pension costs
are calculated separately for each participant and are funded currently. The
amounts of the annual contributions for H. Donald Nelson is included above in
the Summary Compensation Table under "All Other Compensation."

    The TDS supplemental executive retirement plan ("SERP") provides
supplemental benefits under the TDS Pension Plan and the Wireless Pension Plan.
The SERP was established to offset the reduction of benefits caused by the
limitation on annual employee compensation under the Internal Revenue Code. The
SERP is a non-qualified deferred compensation plan and is intended to be
unfunded. The amounts of the accruals for the benefit of the named executive
officers are included above in the Summary Compensation Table under "All Other
Compensation."

    In 1980, TDS entered into a non-qualified supplemental benefit agreement
with LeRoy T. Carlson which, as amended, requires TDS to pay a supplemental
retirement benefit to Mr. Carlson in the amount of $47,567 plus interest at a
rate equal to 1/4% under the prime rate for the period from May 15, 1981 (the
date of Mr. Carlson's 65th birthday) to May 31, 1992, in five annual
installments beginning June 1, 2001, plus interest at 9 1/2% compounded
semi-annually from June 1, 1992. The agreement was entered into because certain
amendments made to the TDS Pension Plan in 1974 had the effect of reducing the
amount of retirement benefits which Mr. Carlson would receive under the TDS
Pension Plan. The payments to be made under the agreement, together with the
retirement benefits under the TDS Pension Plan, were designed to permit
Mr. Carlson to receive approximately the same retirement benefits he would have
received had the TDS Pension Plan not been amended. All the interest accrued
under this agreement is included above in the Summary Compensation Table under
"All Other Compensation" and identified in footnote 8 thereto as contributions
under the TDS Pension Plan.

    In 1988, U.S. Cellular entered into a non-qualified supplemental benefit
agreement with H. Donald Nelson which requires U.S. Cellular to pay a
supplemental retirement benefit to Mr. Nelson. The agreement was entered into
because Mr. Nelson's employment with TDS was terminated upon the completion of
the initial public offering of U.S. Cellular Common Shares in 1988 and, as a
result, he was no longer eligible to participate in the TDS Pension Plan. Under
the supplemental benefit agreement, U.S. Cellular is obligated to pay
Mr. Nelson an amount equal to the difference between the retirement benefit he
will receive from the TDS Pension Plan and that which he would have received had
he continued to work for TDS, less any amounts which he is entitled to receive
under any other qualified pension plan (such as the Wireless Pension Plan). U.S.
Cellular will pay any such benefit at the same time as Mr. Nelson receives
payments from the TDS Pension Plan. The actual benefits payable to Mr. Nelson as
a result of his retirement will be determined actuarially. Because the nature of
this agreement is a defined benefit arrangement, no amounts related thereto are
included above in the Summary Compensation Table.

DEFERRED COMPENSATION AGREEMENTS

    Mr. H. Donald Nelson and Mr. James Barr III are parties to executive
deferred compensation agreements, pursuant to which such persons had a specified
percentage of gross compensation deferred and credited to a deferred
compensation account. The deferred compensation account is credited with
interest compounded monthly, computed at a rate equal to one-twelfth of the sum
of the average thirty-year Treasury Bond rate plus 1.25 percentage points until
the deferred compensation amount is paid to such persons. The amount of
compensation deferred by such persons is included in and reported with all other
non-deferred compensation in the "Summary Compensation Table." No amount is
included in the Summary Compensation Table for the interest earned on such
deferred compensation because such interest rate is intended to approximate a
market rate.

                                       14
<PAGE>
BONUS DEFERRAL AND STOCK UNIT MATCH PROGRAM

    The 1998 long-term incentive plan (the "1998 Plan") provides the opportunity
for those who are employed by TDS at the position of Vice President or above to
defer receipt of a portion of their bonuses and receive TDS matching stock unit
credits. Executives may elect to defer receipt of all or a portion of their
annual bonuses and to receive stock unit matches on the amount deferred up to
$250,000. Deferred compensation will be deemed invested in phantom TDS Common
Shares. TDS match amounts will depend on the amount of annual bonus that is
deferred into stock units. 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. The matched stock units
vest ratably at a rate of one-third per year over three years. The fair market
value of the matched stock units are reported in the Summary Compensation Table
under "Other Annual Compensation."

    LeRoy T. Carlson and LeRoy T. Carlson, Jr., each elected to defer 100% of
their bonuses for 1998 and LeRoy T. Carlson elected to defer 100% of his bonus
for 1999 under the 1998 Plan. Accordingly, each of LeRoy T. Carlson and LeRoy T.
Carlson, Jr. will receive a 25% stock unit match for 50% of their deferred
bonuses and a 33% match for 50% of their deferred bonuses for such years under
the 1998 Plan. The bonuses for 1999 have not yet been determined for Mr. LeRoy
T. Carlson and, therefore, the dollar value of the company match phantom stock
units cannot be determined at this time for Mr. LeRoy T. Carlson. See the
"Summary Compensation Table."

    In addition, U.S. Cellular has a similar plan pursuant to which H. Donald
Nelson has deferred compensation and receives stock unit matches with respect to
USM Common Shares, as reported in the Summary Compensation Table under "Other
Annual Compensation."

OTHER AGREEMENTS

    TDS has entered into an agreement with LeRoy T. Carlson whereby it will
employ Mr. Carlson until he elects to retire. Mr. Carlson is to be paid at least
$60,000 per annum until his retirement. The agreement also provides that upon
his retirement, Mr. Carlson will be retained by TDS as a part-time consultant
(for not more than 60 hours in any month) until his death or disability. Upon
his retirement, Mr. Carlson will receive $75,000 per annum as a consultant, plus
increments beginning in 1985 equal to the greater of three percent of his
consulting fee or two-thirds of the percentage increase in the consumer price
index for the Chicago metropolitan area. If Mr. Carlson becomes disabled before
retiring, TDS can elect to discontinue his employment and retain him in
accordance with the consulting arrangement described above. Upon Mr. Carlson's
death (unless his death follows his voluntary termination of his employment or
the consulting arrangement), his widow will receive until her death an amount
equal to that which Mr. Carlson would have received as a consultant. TDS may
terminate payments under the agreement if Mr. Carlson becomes the owner of more
than 21% of the stock, or becomes an officer, director, employee or paid agent
of any competitor of TDS within the continental United States. No amounts were
paid or payable under this agreement in 1999, 1998 or 1997, and no amounts
related thereto are included above in the Summary Compensation Table.

    Sandra L. Helton was hired as TDS's Executive Vice President-Finance and
Chief Financial Officer on August 10, 1998. Pursuant to a letter agreement
between TDS and Ms. Helton, dated August 7, 1998, Ms. Helton is entitled to
(1) a base salary at the annual rate of $365,000 per year through December 31,
1998, with annual reviews on January 1st of each subsequent year; and
(2) starting in 1999, a target bonus opportunity of 50% of base salary for the
year with bonuses above this level for superior performance. Under this letter
agreement, Ms. Helton received a signing bonus of 3,000 shares of TDS restricted
stock, which vest with respect to one third of the shares on each of her first
three anniversary dates with TDS. Ms. Helton also received a non-qualified stock
option consisting of two parts: (a) an automatic grant of 36,000 stock option
shares which vests in three equal annual installments of 12,000 shares, and
(b) an opportunity to receive performance based non-qualified stock options to
purchase 12,000 shares of TDS stock if target level individual performance
levels are achieved in 1999. The letter agreement also provided that Ms. Helton
would receive a seat on the TDS Board of Directors. In addition, the letter
agreement entitled Ms. Helton to be reimbursed for moving related expenses and
to receive certain other benefits.

COMPENSATION OF DIRECTORS

    The board of directors has adopted a compensation plan (the "Non-Employee
Directors' Plan") for non-employee directors. A non-employee director is a
director of TDS who is not an employee of TDS or its affiliates, U.S. Cellular,
Aerial or TDS Telecom. The purpose of the Non-Employee Directors' Plan is to
provide for reasonable compensation to non-employee directors in connection with
their services to TDS, in order to induce qualified persons to become and serve
as non-employee members of the board of directors.

                                       15
<PAGE>
    The Non-Employee Directors' Plan provides that, effective for the twelve
month period ending at the time of TDS's annual meeting, each non-employee
director will receive an annual director's fee of $24,000; and each director of
TDS who is not an employee of any affiliate will continue to receive a fee of
$1,000, plus reimbursement of reasonable out-of-pocket expenses incurred in
connection with travel for attendance at each regularly scheduled or special
meeting of the board of directors. The Non-Employee Directors' Plan also
provides that each director of TDS who is not an employee of any affiliate will
receive a fee of $750, plus reimbursement of reasonable out-of-pocket expenses
incurred in connection with travel for attendance at each meeting of the audit
committee, stock option compensation committee or other committee established by
resolution of the board of directors.

    Under the Non-Employee Directors' Plan, an amount equal to 50% of the annual
director's fee will be paid immediately prior to TDS's annual meeting of
shareholders by the delivery of Common Shares of TDS having a fair market value
as of the date of payment equal to such percentage of the annual fee. In
addition, under the Non-Employee Directors' Plan, an amount equal to 33% of each
committee meeting fee will be accumulated and paid immediately prior to TDS's
annual meeting of shareholders by the delivery of Common Shares of TDS having a
fair market value as of the date of payment equal to such percentage of such
fee. TDS has reserved 15,000 TDS Common Shares of TDS for issuance pursuant to
the Non-Employee Directors' Plan.

    Donald C. Nebergall, a director of TDS, also received $15,000 as a bonus and
$198,850 in 1999 for consulting services provided to TDS and was reimbursed for
out-of-pocket expenses incurred in connection with such services.

    In addition, TDS pays life insurance premiums on behalf of directors. Except
for such life insurance premiums, directors who are also employees of TDS or any
affiliate do not receive any additional compensation for services rendered as
directors.

EXECUTIVE OFFICER COMPENSATION REPORT

    This report is submitted by LeRoy T. Carlson, Jr., President, who serves as
the compensation committee of the board of directors for all executive officers
of TDS other than the President, and by the TDS stock option compensation
committee of the board of directors which approves all compensation for the
President and approves long-term compensation to executive officers who are
employees of TDS. Long-term compensation for H. Donald Nelson is approved by the
stock option compensation committee of U.S. Cellular (as described in its report
in the proxy statement of U.S. Cellular).

    TDS's compensation policies for executive officers are intended to provide
incentives for the achievement of corporate and individual performance goals and
to provide compensation consistent with the financial performance of TDS. TDS's
policies are based on the belief that the incentive compensation performance
goals for executive officers should be based on factors over which such officers
have control and which are important to TDS's long-term success. It is also
believed that compensation paid should be appropriate in relation to the
financial performance of TDS and should be sufficient to enable TDS to attract
and retain individuals possessing the talents required for the Company's
long-term successful performance.

    Executive compensation consists of both annual and long-term compensation.
Annual compensation consists of a base salary and an annual bonus. TDS evaluates
the annual compensation of each executive officer on an aggregate basis by
combining the base salary and bonus, and also evaluates the level of the base
salary and the bonus separately. Annual compensation decisions are based partly
on individual and corporate short-term performance and partly on the individual
and corporate cumulative long-term performance during the executive's tenure in
his or her position, particularly with regard to the President (chief executive
officer). Long-term compensation is intended to compensate executives primarily
for their contributions to long-term increases in shareholder value. Long-term
compensation is generally provided through the grant of stock options.

                                       16
<PAGE>
    The process of determining base salary begins with establishing an
appropriate salary range for each officer. Each officer's range is based upon
the particular duties and responsibilities of the officer, as well as salaries
for comparable positions with other companies. These other companies include the
companies included in the peer group index described below under "Stock
Performance Chart", as well as other companies in the telecommunications
industry and other industries with similar characteristics, to the extent
considered appropriate in the judgment of the President, based on similar size,
function, geography or otherwise. No written or formal list of specific
companies is prepared. Instead, as discussed below, the President is provided
with various sources of information about executive compensation at other
companies, such as compensation reported in proxy statements of comparable
companies and salary surveys published by various organizations. The President
uses these sources and makes a personal determination of appropriate sources,
companies and ranges for each executive officer. The base salary of each officer
is set within a range considered appropriate in the judgment of the President
based on an assessment of the particular responsibilities and performance of
such officer, taking into account the performance of TDS and/or its business
units or divisions, other comparable companies, the industry and the overall
economy during the immediately preceding year. The President makes a personal
determination of the appropriate range based on the total mix of information
available to him. The range considered to be relevant by the President is based
on his informed judgment, using the information provided to him by the Vice
President of Human Resources, as discussed below. The range is not based on any
formal analysis nor is there any documentation of the range which the President
considers relevant in making his compensation decisions. The salary of the
executive officers is believed to be at or slightly above the median of the
range considered to be relevant in the judgment of the President.

    Annually, the nature and extent of each executive officer's major
accomplishments and contributions for the year are determined through written
information prepared by the executive and by others familiar with his or her
performance, including the executive's direct supervisor. With regard to all
executive officers other than the President, the President evaluates the
information in terms of the personal objectives given by the President or other
direct supervisor to such executive officer for the performance appraisal
period. The President also makes an assessment of how well TDS did as a whole
during the year and the extent to which the President believes the executive
officer contributed to the results. With respect to executive officers having
primary responsibility over a certain business unit or division of TDS, the
President considers the performance of the business unit or division and makes
an assessment of the contribution of the executive officer thereto. No specific
measures of performance are considered determinative in the compensation of
executive officers. Instead, all the facts and circumstances are taken into
consideration by the President in his executive compensation decisions.
Ultimately, it is the informed judgment of the President that determines an
executive's salary and bonus, this being based on the total mix of information
rather than on any specific measures of performance.

    The primary focus of TDS is increasing long-term shareholder value through
growth, measured primarily in such terms as revenues, customer units in service,
operating cash flow (operating income plus depreciation and amortization) and
operating income. However, there is no quantifiable or direct relationship
between compensation and such or any other measures of performance. Instead,
such compensation decisions are made subjectively considering such performance
measures, as well as all other facts and circumstances in general terms.

    Other than for the President of TDS, the President of TDS approves annual
compensation for executive officers of TDS and each of its business units or
divisions. The Vice President-Human Resources accumulates and prepares various
materials, including relevant base pay and bonus information, for the annual
compensation reviews of executive officers. These materials are reviewed by the
President along with various performance evaluation information. The President
will determine the bonus for 1999 and base salary for 2000 for all executives
other than himself. TDS has no written or formal corporate bonus plan. The
bonuses for corporate executive officers are determined by the President based
on his evaluation of each executive's contribution to TDS, the achievement of
individual objectives, the performance of the Company and/or its business units
and divisions and all other facts and circumstances considered relevant in his
judgment. The 1999 bonuses approved for the named executives are listed above in
the Summary Compensation Table.

    The annual compensation of the President (Chief Executive Officer) of TDS is
approved or adjusted by the stock option compensation committee. In addition to
the factors described above for all executive officers in general, the Vice
President-Human Resources prepares an analysis of compensation paid to chief
executive officers of other comparable companies. These other companies include
the companies included in the peer group index described below under "Stock
Performance Chart", as well as other companies in the telecommunications
industry and other industries with similar characteristics, to the extent
considered appropriate in the judgment of the President, based on similar size,
function, geography or otherwise. This information is presented to the stock
option

                                       17
<PAGE>
compensation committee which approves the final base salary and bonus of the
President based on such information. The stock option compensation committee
approved a 1998 bonus of $310,000 for the President, and increased his 1999 base
salary to $630,000, representing an increase of $60,000 or 10.5% over his base
salary of $570,000 in 1998. The stock option compensation committee has not yet
approved the President's bonus for 1999 or the President's base salary for 2000.

    As with the other executive officers, the compensation of the President is
based on all facts and circumstances and the total mix of information rather
than related to any specific measures of performance. The stock option
compensation committee has access to numerous performance measures and financial
statistics prepared by TDS's financial personnel. This financial information
includes the audited financial statements of the Company, as well as internal
financial statements such as budgets and their results, operating statistics and
various analyses. The stock option compensation committee is not limited in its
analysis to the information presented to it by the President or available from
financial personnel and may consider other factual or subjective factors as the
members of such committee deem appropriate in their compensation decisions. No
specific measures of performance are considered determinative in the
compensation of the President. Instead, all the facts and circumstances are
taken into consideration by the stock option compensation committee in its
executive compensation decisions. Ultimately, it is the informed judgment of the
stock option compensation committee, based on the information provided by the
Vice President--Human Resources, that determines the salary and bonus for the
President, this being based on the total mix of information rather than on any
specific measures of performance.

    As discussed above for the other executive officers, the primary focus of
TDS is increasing long-term shareholder value through growth, measured primarily
in such terms as revenues, customer units in service, operating cash flow
(operating income plus depreciation and amortization) and operating income.
However, as discussed above, there is no quantifiable or direct relationship
between compensation and such or any other measures of performance. Instead,
such compensation decisions are made subjectively considering such performance
measurers, as well as all other facts and circumstances in general terms.

    The stock option compensation committee believes that the annual total base
salary and bonus compensation of the President has been set at a level less than
an average level for equally responsible executives at companies which it
considers comparable. Each of the members of the stock option compensation
committee base this belief on his or her personal assessment and judgment of the
President's responsibilities in comparison to those of the chief executive
officers and chief operating officers of the companies included in the peer
group index described below under "Stock Performance Chart", as well as other
companies in the telecommunications industry and other industries with similar
characteristics, based on the information prepared by the Vice President--Human
Resources, as discussed above. The President has a substantial beneficial
interest in TDS, as described below under "Security Ownership of Management",
and will benefit together with other shareholders based on the performance of
the Company. The stock option compensation committee considers this an important
fact in connection with its review and approval or adjustment of the President's
salary and bonus.

    The President may also recommend to the stock option compensation committee
long-term compensation in the form of additional stock option grants, stock
appreciation rights or otherwise for executive officers. The long-term
compensation decisions for executive officers will be made by the stock option
compensation committee in a manner similar to that described for annual base
salary and bonus decisions, except that the stock options will generally vest
over several years in a manner which will reflect the goal of relating the
long-term compensation of the executive officers, including the President, to
increases in shareholder value over the same period.

    The performance of TDS also bears upon the number of stock options which
will be awarded and become exercisable with respect to the executive officers.
As indicated under the table "Individual Option/SAR Grants in 1999", certain
named executive officers received an award in 1999 of Performance Options based
on the achievement of certain levels of corporate and individual performance in
1998.

    SECTION 162(m) OF THE CODE.  Section 162(m) of the Internal Revenue Code
generally limits to $1 million the amount that a publicly held corporation is
allowed each year to deduct for the compensation paid to each of the
corporation's chief executive officer and the corporation's four most highly
compensated officers other than the chief executive officer, subject to certain
exceptions. For various reasons, TDS does not believe that the $1 million
deduction limitation should have a material effect on TDS in the immediate
future. If the $1 million deduction limitation is expected to have a material
effect on TDS in the future, TDS will consider ways to maximize the
deductibility of executive compensation, while retaining the discretion TDS
deems necessary to compensate executive officers in a manner commensurate with
performance and the competitive environment for executive talent.

                                       18
<PAGE>
    This Executive Officer Compensation Report is submitted by LeRoy T. Carlson,
Jr., sole member of the compensation committee and by the stock option
compensation committee: George W. Off (Chairman) and Dr. Letitia G. C. Carlson.

STOCK PERFORMANCE CHART

    The following chart graphs the performance of the cumulative total return to
shareholders (stock price appreciation plus dividends) during the previous five
years in comparison to returns of the Standard & Poor's 500 Composite Stock
Price Index and a peer group index. The peer group index was constructed
specifically for TDS and includes the following companies: ALLTEL Corp.,
Centennial Cellular CP (Class A), Century Telephone Enterprise, Citizen
Utilities (Ser. B), Rural Cellular Corp. (Class A), Western Wireless Corp.
(Class A) and TDS. The peer group no longer includes Frontier Group due to the
fact that it was acquired in 1999 and, accordingly, its stock is no longer
publicly traded. In calculating the peer group index, the returns of each
company in the group have been weighted according to such company's market
capitalization at the beginning of the period.

                      COMPARATIVE FIVE-YEAR TOTAL RETURNS*
                            TDS, S&P 500, PEER GROUP
                     (PERFORMANCE RESULTS THROUGH 12/31/99)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
        TDS      S&P    PEER GROUP
                 500
<S>   <C>      <C>      <C>
1994  $100.00  $100.00     $100.00
1995   $86.47  $137.58     $100.66
1996   $80.12  $169.17     $100.39
1997  $103.96  $225.60     $130.69
1998  $101.41  $290.08     $184.44
1999  $286.00  $351.12     $350.84
</TABLE>

<TABLE>
<CAPTION>
                                                       1994       1995       1996       1997       1998       1999
                                                     --------   --------   --------   --------   --------   --------
<S>                                                  <C>        <C>        <C>        <C>        <C>        <C>
TDS................................................  $100.00    $ 86.47    $ 80.12    $103.96    $101.41    $286.00
S&P 500............................................  $100.00    $137.58    $169.17    $225.60    $290.08    $351.12
Peer Group.........................................  $100.00    $100.66    $100.39    $130.69    $184.44    $350.84
</TABLE>

    Assumes $100.00 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in TDS Common Shares,
S&P 500 and Peer Group.

    *Cumulative total return assumes reinvestment of dividends.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    The sole member of the compensation committee is LeRoy T. Carlson, Jr.,
President of TDS. The primary function of the compensation committee is to
approve the annual salary, bonus and other cash compensation of officers and key
employees of TDS other than the President. LeRoy T. Carlson, Jr. is a member of
the board of directors of TDS, U.S. Cellular, Aerial and TDS Telecom. LeRoy T.
Carlson, Jr. is also the Chairman of U.S. Cellular, Aerial and TDS Telecom and,
as such, approves the executive officer annual compensation decisions for U.S.
Cellular, Aerial and TDS Telecom. LeRoy T. Carlson, Jr. is compensated by TDS
for his services to TDS and all its

                                       19
<PAGE>
subsidiaries. However, U.S. Cellular and Aerial reimburse TDS for a portion of
such compensation pursuant to intercompany agreements between TDS and such
subsidiaries. The stock option compensation committee of the board of directors
of TDS makes annual compensation decisions for the President of TDS and makes
long-term compensation decisions for all executive officers who are employees of
TDS. The members of the stock option compensation committee are George W. Off
(Chairman) and Dr. Letitia G. C. Carlson. The members of the stock option
compensation committee are neither officers nor employees of the Company or any
of its subsidiaries nor directors of any of the Company's subsidiaries.
Long-term compensation for executive officers who are employees of U.S. Cellular
or Aerial are approved by the stock option compensation committees of U.S.
Cellular and Aerial respectively. The stock option compensation committees of
U.S. Cellular and Aerial are composed of directors of such subsidiaries who are
neither officers nor employees of TDS or any of its subsidiaries nor directors
of TDS.

    In addition to such compensation committee interlocks and insider
participation in compensation decisions, TDS and certain related parties are
involved in the following relationships and transactions.

    OTHER RELATIONSHIPS AND RELATED TRANSACTIONS.  Walter C. D. Carlson, a
director of TDS, U.S. Cellular and Aerial, Michael G. Hron, the General Counsel
and an Assistant Secretary of TDS and U.S. Cellular, the Secretary of Aerial and
the Secretary or Assistant Secretary of certain other TDS subsidiaries, William
S. DeCarlo, an Assistant Secretary of TDS and certain TDS subsidiaries, Stephen
P. Fitzell and Sherry S. Treston, each an Assistant Secretary of certain TDS
subsidiaries, are partners of Sidley & Austin, the principal law firm of TDS and
its subsidiaries. Walter C. D. Carlson is a trustee and beneficiary of a voting
trust which controls TDS.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    On February 29, 2000, TDS had outstanding and entitled to vote 54,197,342
Common Shares, par value $.01 per share (excluding 1,215,107 Common Shares held
by TDS and 484,012 Common Shares held by a subsidiary of the Company); 6,958,391
Series A Common Shares, par value $.01 per share; and 88,057 Preferred Shares,
par value $.01 per share.

    Each of the outstanding Common Shares and Preferred Shares is entitled to
one vote and each of the outstanding Series A Common Shares is entitled to ten
votes. Accordingly, the voting power of all outstanding Series A Common Shares
was 69,583,910 votes. The total voting power of all outstanding shares of all
classes of capital stock was 123,869,309 votes at February 29, 2000 with respect
to matters other than the election of directors.

SECURITY OWNERSHIP OF MANAGEMENT

    The following table sets forth as of February 29, 2000, or the latest
practicable date, the number of Common Shares and Series A Common Shares
beneficially owned, and the percentage of the outstanding shares of each such
class so owned by each director and nominee for director of TDS, by each of the
executive officers named in the Summary Compensation Table and by all directors
and executive officers as a group.

<TABLE>
<CAPTION>
                                                               AMOUNT AND               PERCENT OF
                                                               NATURE OF                SHARES OF    PERCENT OF
      NAME OF INDIVIDUAL OR                                    BENEFICIAL    PERCENT      COMMON       VOTING
   NUMBER OF PERSONS IN GROUP           TITLE OF CLASS        OWNERSHIP(1)   OF CLASS     STOCK       POWER(2)
   --------------------------           --------------        ------------   --------   ----------   ----------
<S>                                <C>                        <C>            <C>        <C>          <C>
LeRoy T. Carlson, Jr.,
Walter C. D. Carlson,
Letitia G. C. Carlson and
Donald C. Nebergall(3)...........  Series A Common Shares       6,359,808      91.4%       10.4%        51.3%
LeRoy T. Carlson, Jr.,
Sandra L. Helton,
C. Theodore Herbert,
Peter L. Sereda,
and Michael G. Hron(4)...........  Common Shares                    1,008         *           *            *
                                   Series A Common Shares         146,576       2.1           *          1.2
LeRoy T. Carlson, Jr.,
Sandra L. Helton,
C. Theodore Herbert,
Peter L. Sereda,
and Michael G. Hron(5)...........  Common Shares                  106,665         *           *            *
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                               AMOUNT AND               PERCENT OF
                                                               NATURE OF                SHARES OF    PERCENT OF
      NAME OF INDIVIDUAL OR                                    BENEFICIAL    PERCENT      COMMON       VOTING
   NUMBER OF PERSONS IN GROUP           TITLE OF CLASS        OWNERSHIP(1)   OF CLASS     STOCK       POWER(2)
   --------------------------           --------------        ------------   --------   ----------   ----------
<S>                                <C>                        <C>            <C>        <C>          <C>
LeRoy T. Carlson (6)(12).........  Common Shares                  131,581         *           *            *
                                   Series A Common Shares          52,001         *           *            *
LeRoy T. Carlson, Jr.(7)(12).....  Common Shares                  191,893         *           *            *
                                   Series A Common Shares          16,988         *           *            *
Walter C. D. Carlson(8)..........  Common Shares                      105         *           *            *
                                   Series A Common Shares             833         *           *            *
Letitia G. C. Carlson(9).........  Common Shares                       80         *           *            *
                                   Series A Common Shares             900         *           *            *
Sandra L. Helton(12).............  Common Shares                   27,032         *           *            *
James Barr III(12)...............  Common Shares                   24,322         *           *            *
Murray L. Swanson(10)............  Common Shares                      229         *           *            *
                                   Series A Common Shares           2,515         *           *            *
Donald C. Nebergall(11)..........  Common Shares                    1,781         *           *            *
Herbert S. Wander................  Common Shares                      845         *           *            *
George W. Off....................  Common Shares                    1,658         *           *            *
Martin L. Solomon................  Common Shares                   10,487         *           *            *
Kevin A. Mundt...................  Common Shares                      198         *           *            *
H. Donald Nelson(10).............  Common Shares                    8,258         *           *            *
All directors, director nominees   Common Shares
and executive officers as a group  Series A Common Shares
(28 persons)(10)(12).............                                 932,586       1.7%        1.5%           *
                                                                6,591,540      94.7%       10.8%        53.2%
</TABLE>

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

*   Less than 1%

(1) The nature of beneficial ownership for shares in this column is sole voting
    and investment power, except as otherwise set forth in these footnotes.

(2) Represents the percent of voting power in matters other than the election of
    directors.

(3) The shares listed are held by the persons named as trustees under a voting
    trust which expires June 30, 2009, created to facilitate longstanding
    relationships among the trust certificate holders. Under the terms of the
    voting trust, the trustees hold and vote the Series A Common Shares held in
    the trust. If the voting trust were terminated, the following persons would
    each be deemed to own beneficially more than 5% of the outstanding Series A
    Common Shares: Margaret D. Carlson (wife of LeRoy T. Carlson), LeRoy T.
    Carlson, Jr., Walter C. D. Carlson, Prudence E. Carlson, Letitia G. C.
    Carlson (children of LeRoy T. Carlson and Margaret D. Carlson) and Donald C.
    Nebergall, as trustee under certain trusts for the benefit of the heirs of
    LeRoy T. and Margaret D. Carlson and an educational institution.

(4) Voting and investment control is shared by the persons named as members of
    the investment management committee of the TDS employees' pension trust and
    the wireless companies' pension plan. Such members disclaim beneficial
    ownership of such shares, which are held for the benefit of plan
    participants.

(5) Voting and investment control with respect to Company-match shares is shared
    by the persons named as members of the investment management committee of
    the TDS tax-deferred savings trust. Does not include 148,515 shares acquired
    by trust employee contributions for which voting and investment control is
    passed-through to plan participants. The members of the investment
    management committee disclaim beneficial ownership of such shares, except
    for shares held in such plan for their benefit.

(6) Includes 52,001 Series A Common Shares held by Mr. Carlson's wife.
    Mr. Carlson disclaims beneficial ownership of such shares. Does not include
    224,394 Series A Common Shares held for the benefit of LeRoy T. Carlson,
    632,558 Series A Common Shares held for the benefit of Mr. Carlson's wife or
    51,046 Series A Common Shares held for the benefit of certain grandchildren
    of Mr. Carlson (an aggregate of 907,998 shares, or 13.0% of class) in the
    voting trust described in footnote (3). Beneficial ownership is disclaimed
    as to Series A Common Shares held for the benefit of his wife and
    grandchildren in such voting trust.

(7) Does not include 1,077,533 Series A Common Shares (15.5% of class) held in
    the voting trust described in footnote (3), of which 1,036,982 shares are
    held for the benefit of LeRoy T. Carlson, Jr. Beneficial ownership is
    disclaimed with respect to an aggregate of 40,551 Series A Common Shares
    held for the benefit of his wife, his children and others in such voting
    trust.

(8) Does not include 1,102,274 Series A Common Shares (15.8% of class) held in
    the voting trust described in footnote (3), of which 1,068,345 shares are
    held for the benefit of Walter C. D. Carlson. Beneficial ownership is
    disclaimed with respect to an aggregate of 33,929 Series A Common Shares
    held for the benefit of his wife and children in such voting trust.

(9) Does not include 1,075,048 Series A Common Shares (15.5% of class) held in
    the voting trust described in footnote (3), of which 1,061,725 shares are
    held for the benefit of Letitia G. C. Carlson. Beneficial ownership is
    disclaimed with respect to an aggregate of 13,323 Series A Common Shares
    held for the benefit of her husband and children in such voting trust.

(10) Includes shares as to which voting and/or investment power is shared,
    and/or shares held by spouse and/or children.

                                       21
<PAGE>
(11) Does not include 647,043 Series A Common Shares (9.3% of class) held as
    trustee under trusts for the benefit of the heirs of LeRoy T. and Margaret
    D. Carlson and an educational institution, or 272 Series A Common Shares
    held for the benefit of Donald C. Nebergall, which are included in the
    voting trust described in footnote (3).

(12) Includes the following number of Common Shares that may be purchased
    pursuant to stock options which are currently exercisable or exercisable
    within 60 days: Mr. LeRoy T. Carlson, 125,008 shares; Mr. LeRoy T. Carlson,
    Jr., 176,767 shares; Ms. Helton, 24,000 shares (plus 2,000 shares of
    restricted stock subject to future vesting); Mr. Barr, 20,000 shares; all
    other executive officers, 373,275 shares; and all directors and officers as
    a group, 719,020 shares.

SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS

    In addition to persons listed in the preceding table and the footnotes
thereto, the following table sets forth as of February 29, 2000, or the latest
practicable date, information regarding each person who is known to TDS to own
beneficially more than 5% of any class of voting securities of TDS, based on
publicly available information and TDS's stock records as of such date. The
nature of beneficial ownership in this table is sole voting and investment power
except as otherwise set forth in footnotes thereto.

<TABLE>
<CAPTION>
                                                                                        PERCENT OF
                                                                                        SHARES OF
                                                                SHARES OF    PERCENT      COMMON      PERCENT OF
      SHAREHOLDER'S NAME AND ADDRESS         TITLE OF CLASS    CLASS OWNED   OF CLASS     STOCK      VOTING POWER
      ------------------------------        ----------------   -----------   --------   ----------   ------------
<S>                                         <C>                <C>           <C>        <C>          <C>
Gabelli Funds, Inc.(1)
  One Corporate Center
  Rye, New York 10580.....................  Common Shares       6,343,525      11.7%       10.4%          5.1%
Franklin Mutual Advisers, LLC(2)
  51 John F. Kennedy Parkway
  Short Hills, New Jersey 07078...........  Common Shares       4,951,675       9.1%        8.1%          4.0%
AXA Financial, Inc.(3)
  1290 Avenue of the Americas
  New York, New York 10104................  Common Shares       3,191,837       5.9%        5.2%          2.6%
Marlene Click
  Dayton, Ohio 45458......................  Preferred Shares       11,417      12.6%        N/A             *
Adelene M. Lewis
  London, Kentucky 40741..................  Preferred Shares       12,000      13.3%        N/A             *
Edward A. Mattingly
  London, Kentucky 40744..................  Preferred Shares        7,000       7.8%        N/A             *
Ronnie C. Stewart
  Hyden, Kentucky 41749...................  Preferred Shares        5,000       5.6%        N/A             *
</TABLE>

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

*   Less than 1%

(1) Based upon a Schedule 13D (Amendment No. 8) filed with the SEC. Includes
    shares held by the following affiliates: Gabelli Funds, LLC--2,232,300
    shares; ALCE Partners, L.P.--1,000 shares; GAMCO Investors, Inc.--4,079,425
    shares; Gemini Capital Management Ltd.--16,000 shares; Gabelli Global
    Partners L.P.--3,245 shares; Gabelli Global Partners Ltd.--1,755 shares;
    Mario J. Gabelli--2,500 shares; and other--7,300 shares. In such
    Schedule 13D filing, such group has reported sole voting power with respect
    to 6,213,725 shares and sole dispositive power with respect to 6,343,525
    shares.

(2) Based on the most recent Schedule 13G filed with the SEC (Amendment No. 2).
    Such Schedule 13G reports that Franklin Mutual Advisers, Inc. exercised sole
    voting and investment power with respect to all such shares. Such
    Schedule 13G is also filed on behalf of Franklin Resources, Inc., the parent
    holding company of Franklin Mutual Advisers, LLC, and by Charles B. Johnson
    and Rupert H. Johnson, Jr., principal shareholders of such parent holding
    company.

(3) Based on the most recent Schedule 13G (Amendment No. 14) filed with the SEC.
    Includes shares held by the following affiliates: The Equitable Life
    Assurance Society of the United States--820,700 shares; AXA Rosenburg
    (US)--78,000 shares; Alliance Capital Management, L.P.--2,263,156 shares;
    Wood, Struthers & Winthrop Management Corp.--27,400 shares; and Donaldson
    Lufkin & Jenrette Securities Corporation--2,581 shares. In such
    Schedule 13G, AXA reported sole voting power with respect to 1,796,990
    shares, shared voting power with respect to 1,320,900 shares, sole
    dispositive power with respect to 3,113,256 shares and shared dispositive
    power with respect to 78,581 shares. This Schedule 13G is also filed on
    behalf of AXA Courtage Assurance Mutuelle, AXA Conseil Vie Assurance
    Mutuelle, AXA Assurances I.A.R.D. Mutuelle and AXA, corporations organized
    under the laws of France that are affiliates of AXA Financial, Inc.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder require the Company's directors and officers, and
persons who are deemed to own more than ten percent of the Common Shares, to
file certain reports with the SEC with respect to their beneficial ownership of
Common Shares. The reporting persons are also required to furnish TDS with
copies of all such reports they file.

                                       22
<PAGE>
    Based on a review of copies of such reports furnished to TDS by the
reporting persons and written representations by directors and officers of TDS,
TDS believes that all filing requirements under Section 16 of the Securities
Exchange Act applicable to the reporting persons during and with respect to 1999
were complied with on a timely basis, except as follows:

    Certain accounts in which Martin L. Solomon participates acquired and then
disposed of 270 Common Shares. No reports under Section 16 have been filed to
report such transactions. Mr. Solomon is seeking information about such
transactions in order to permit the required information to be reported.

                                   PROPOSAL 2
                         INDEPENDENT PUBLIC ACCOUNTANTS

    We anticipate continuing the services of Arthur Andersen as independent
public accountants for the current fiscal year. Representatives of Arthur
Andersen, who served as independent public accountants for the last fiscal year,
are expected to be present at the annual meeting of shareholders and will have
the opportunity to make a statement and to respond to appropriate questions
raised by shareholders at the annual meeting or submitted in writing prior
thereto.

    We are not required to obtain shareholder ratification of the selection of
Arthur Andersen as our independent public accountants by the Bylaws or
otherwise. However, as a matter of good corporate practice, we have elected to
seek such ratification by the affirmative vote of the holders of a majority of
the votes cast by shares entitled to vote with respect to such matter at the
annual meeting. Should the shareholders fail to ratify the selection of Arthur
Andersen as independent public accountants, the board of directors will consider
whether to retain such firm for the year ending December 31, 2000.

    THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL
YEAR.

                                   PROPOSAL 3
        SHAREHOLDER PROPOSAL WHICH IS OPPOSED BY THE BOARD OF DIRECTORS

    The following proposal, including a supporting statement, was submitted by a
shareholder of the Company, and is required to be included in the Company's
proxy statement under the rules of the Securities and Exchange Commission. TDS
will provide information with respect to the full name and address of the
proponent and the number of Common Shares held by the proponent to any person
orally or in writing, as requested, promptly upon the receipt of an oral or
written request therefor. TDS has included the text of the proposal and
supporting statement below exactly as received from the proponent. TDS does not
support and disclaims all responsibility for the content of the following
proposal and its supporting statement. For the reasons set forth below the
material submitted by the proponent, the board of directors of TDS does not
believe the following shareholder proposal is in the best interests of TDS and
its shareholders, and recommends that shareholders vote "AGAINST" the following
proposal:

                     RESOLUTION TO TELEPHONE & DATA SYSTEMS

    WHEREAS, the Board's practices in governing the Company's affairs can
significantly affect the value of the shareholders' investments;

    WHEREAS, shareholders have a legitimate interest in evaluating the
composition of the Board, in order to assess the Board's ability to represent
shareholders' interests;

    WHEREAS, the Company's current Board structure raises serious questions
about the Board's capacity to act independently of management if necessary.

    RESOLVED, that the shareholders request that the Company adopt, and
communicate to shareholders, a policy to move rapidly to reconfigure the board
of directors so that a substantial majority of directors are independent, and
the board has Audit, Compensation and Nominating committees that consist
entirely of independent directors. An "independent director" is one who is not a
present or former employee of the Company and has no significant financial or
personal ties, other than stock ownership, to the Company or management.

                              SUPPORTING STATEMENT

    TIAA-CREF is a long-term shareholder with investments in more than 2,500
U.S. corporations, including a significant investment in Telephone & Data
Systems, Inc. We believe the primary responsibility of a board of

                                       23
<PAGE>
directors is fostering a company's long-term success, consistent with the
board's fiduciary obligation to shareholders. To fulfill best that
responsibility and thereby enhance a company's ability to produce long-term
shareholder value, a substantial majority of the board should be independent
directors, and certain key committees should be composed entirely of independent
directors.

    Unlike the boards of most large U.S. Companies, a majority of Telephone &
Data Systems directors are either officers or ex-officers of the company, or
have business and/or family ties with the company or its officers. This lack of
board independence is facilitated by the company's dual class stock structure.

    The existence of a board that lacks a substantial majority of independent
directors is inimical to effective oversight on behalf of all shareholders and
to the long-term success of Telephone & Data Systems, in our view.

    We believe an independent board is an essential component of any effective
corporate governance system. An independent board can best represent all
shareholders and inspire shareholder confidence in the quality and impartiality
of its decision-making processes and the decisions themselves, without the
appearance of conflicts of interest. We acknowledge the importance of input of
people with intimate knowledge of a company in board or committee deliberations,
but we believe key management executives can take an active part in board
discussions without being board members.

    Because having a truly independent board structure is important in gaining
shareholders' confidence, and, ultimately, in enhancing the company's long-term
value, we ask that this resolution be adopted.

    STATEMENT BY THE BOARD OF DIRECTORS OF TDS IN OPPOSITION TO THE PROPOSAL

    TDS has consistently sought to add to its board of directors eminently
qualified individuals whom TDS believes would provide substantial benefit and
guidance to TDS. TDS believes that substantial judgment, diligence and care are
required to identify and select qualified persons as directors and, accordingly,
finds this shareholder proposal to be unduly restrictive and wholly
inappropriate.

    The proposal seeks to impose "independence" requirements that are broad,
arbitrary and unwarranted. TDS's directors are subject to the same fiduciary
duties to TDS and its shareholders regardless of whether or not they are now or
have been previously officers of TDS, or have other business and/or family ties
to TDS or its officers. To restrict the election of individuals who have been
officers of TDS in the past is excessively broad. An individual who has
previously been an officer of TDS will not necessarily possess any lesser degree
of independence and objectivity than someone who has not previously been an
officer of TDS. Similarly, it cannot be assumed that a director who is currently
an officer or has other business ties with TDS or its officers will not act with
objectivity or in the best interests of the shareholders. Furthermore, the
proposal would place limitations on the election of individuals who have family
ties with TDS or its officers, even though such relationships would not
necessarily interfere with a person's independence, objectivity or competence to
serve as a director.

    TDS's board of directors includes several persons who have a significant
equity or financial interest in TDS. Individuals who have a significant equity
or financial interest in TDS may be the most qualified persons to protect and
advance the interests of TDS and its shareholders. If the board of directors
were to adopt the narrow definition of "independence" set forth in this
shareholder proposal, TDS could be precluded from nominating as directors
persons who have a significant equity or financial interest in TDS because of an
employment or personal relationship. Thus, the proposal would unnecessarily
restrict the ability of TDS to nominate for election as directors persons who
are often the most knowledgeable and familiar with TDS and its operations, or
are otherwise in the best position to further the interests of TDS and its
shareholders.

    Contrary to the suggestion in the proponent's statement, the board of
directors does not believe that the existence of a board that lacks a
substantial majority of independent directors is inimical to effective oversight
on behalf of all shareholders and to the long-term success of TDS. On the
contrary, the board believes that the approval of the proponent's proposal would
tend to diminish the long-term success of TDS. Many of the current directors who
would be excluded from serving if the proponent's proposal were adopted have
substantial equity interests in TDS. The board does not believe that TDS or its
shareholders would be better served by removing directors who have substantial
interests in TDS.

    Certain decisions, which may involve a potential conflict of interest, may
be considered and made by outside directors. From time to time, in accordance
with Delaware law, TDS may appoint a special committee of independent directors
to consider matters in which other directors may have a conflict of interest.
The stock option compensation committee, which administers TDS's stock option
and long-term incentive compensation plans, consists solely of directors who
qualify as "outside directors" under Section 162(m) of the Internal Revenue Code

                                       24
<PAGE>
and as "non-employee directors" under Section 16 of the Securities Exchange Act
of 1934. In addition, the audit committee, which oversees TDS's financial
reporting and TDS's internal control system, includes a majority of directors
who qualify as independent directors under the rules of the American Stock
Exchange. Under new rules of the American Stock Exchange, after a transition
period and subject to a very limited exception, the audit committee will need to
consist entirely of independent directors. Although TDS does not have a
nominating committee, this function is handled by the full board of directors,
which includes independent directors.

    Although the current rules of the American Stock Exchange only require that
TDS have two independent directors, TDS has four directors who qualify as
independent under the rules of the American Stock Exchange. Three of these
independent directors were elected by the holders of Common Shares and certain
series of Preferred Shares. Other directors, including the other independent
director, are elected by the holders of Series A Common Shares and certain
series of Preferred Shares. The election and qualification of all directors is
governed by the rules of the American Stock Exchange, Delaware law and the TDS
charter. While the board recognizes the important role of independent directors,
it believes that the imposition of additional constraints on the director
selection process beyond the requirements of the American Stock Exchange,
applicable law and the TDS charter would be undesirable.

    The board believes that this proposal too narrowly defines the concept of
"independence" as it applies to directors. The board believes that it would be
imprudent to adopt and apply the criteria set forth in the proposal without
evaluating the substance of each relationship in question and the overall
qualifications of each board nominee. This proposal restricts rather than
enhances TDS's ability to identify the most qualified individuals to serve as
directors. Shareholders ultimately decide on the composition of the board.
Holders of Series A Common Shares and certain Preferred Shares are entitled to
cast or withhold their votes with respect to nominees for election as directors
by such group of holders, and holders of Common Shares and certain Preferred
Shares are entitled to cast or withhold their votes with respect to nominees for
election as directors by such group of holders. Any shareholder who feels that a
particular nominee to be elected by such shareholder's voting group is not
qualified to serve as a director by reason of lack of independence or otherwise
is free to withhold his or her vote from such director. The shareholder
proposal, if implemented, would merely limit the freedom of choice presently
enjoyed by TDS's shareholders. Accordingly, the board of directors does not
recommend that this shareholder proposal be adopted.

    THE BOARD OF DIRECTORS OPPOSES THIS SHAREHOLDER PROPOSAL AND RECOMMENDS THAT
SHAREHOLDERS VOTE "AGAINST" THIS PROPOSAL.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    See "Executive Compensation-Compensation Committee Interlocks and Insider
Participation."

               SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING

    Proposals of shareholders intended to be included in TDS's proxy statement
and form of proxy relating to the 2001 annual meeting of shareholders must be
received by the Company at its principal executive offices not later than
December 20, 2000.

    Proposals by shareholders intended to be presented at the 2001 annual
meeting of shareholders must be received by TDS at its principal executive
offices not earlier than December 20, 2000 and not later than January 19, 2001
for consideration at the 2001 annual meeting of shareholders. Since this period
will expire at least 45 days prior to the date of the proxy statement for the
2001 annual meeting (assuming the the normal mailing and meeting schedule), the
proxy solicited by the Board of Directors for the 2001 Annual Meeting will
confer discretionary authority to vote on any matter that may properly come
before the meeting or any adjournment thereof. However, if the date of the 2001
annual meeting of shareholders is changed by more than thirty calendar days from
the date of our 2000 annual meeting of shareholders, shareholder proposals must
be received by TDS not later than the close of business on the tenth day
following the date of public notice of the date of the 2001 annual meeting of
shareholders.

                            SOLICITATION OF PROXIES

    Your proxy is being solicited by the board of directors and its agents, and
the cost of solicitation will be paid by TDS. Officers, directors and regular
employees of the Company, acting on its behalf, may also solicit proxies by
mail, advertisement, telephone, telegraph, in person or other methods. None of
such persons will receive additional compensation for such solicitations. The
Company has also retained MacKenzie Partners, Inc. to assist in the

                                       25
<PAGE>
solicitation of proxies for a fee of $7,500 plus reimbursement of out-of-pocket
expenses. TDS will, at its expense, request brokers and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of shares held of record by such persons.

                             FINANCIAL INFORMATION

    WE WILL FURNISH YOU WITHOUT CHARGE A COPY OF OUR ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, INCLUDING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THERETO, UPON THE WRITTEN OR ORAL REQUEST OF ANY SHAREHOLDER
AS OF THE RECORD DATE, AND WILL PROVIDE COPIES OF THE EXHIBITS TO ANY SUCH
DOCUMENTS UPON PAYMENT OF A REASONABLE FEE WHICH SHALL NOT EXCEED OUR REASONABLE
EXPENSES INCURRED THEREWITH. REQUESTS FOR SUCH MATERIALS SHOULD BE DIRECTED TO
INVESTOR RELATIONS, TELEPHONE AND DATA SYSTEMS, INC., 30 NORTH LASALLE STREET,
40TH FLOOR, CHICAGO, ILLINOIS 60602, TELEPHONE (312) 630-1900.

                                 OTHER BUSINESS

    It is not anticipated that any action will be asked of the shareholders
other than that set forth above, but if other matters properly are brought
before the annual meeting, the persons named in the proxy will vote in
accordance with their best judgment.

                                          By order of the Board of Directors

                                          [SIGNATURE]

                                          Gregory J. Wilkinson
                                          VICE PRESIDENT AND SECRETARY

   ALL SHAREHOLDERS ARE URGED TO SIGN, DATE AND MAIL THEIR PROXIES PROMPTLY.

                                       26
<PAGE>

PROXY                                                                     PROXY


              PROXY FOR SERIES A COMMON SHARES SOLICITED ON BEHALF OF
       THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
                         TELEPHONE AND DATA SYSTEMS, INC.
                            TO BE HELD ON MAY 19, 2000

     The undersigned hereby appoints LeRoy T. Carlson, Jr., and Donald C.
Nebergall, or either of them acting in the absence of the other, with power
of substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of Series A Common Shares that the
undersigned would be entitled to vote if then personally present at the 2000
Annual Meeting of the Shareholders of Telephone and Data Systems, Inc., to be
held on Friday, May 19, 2000, or at any adjournment thereof, as set forth in
the accompanying Notice of Annual Meeting and Proxy Statement, receipt of
which is hereby acknowledged, as designated on the reverse side hereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1,
"FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE NOMINEES IN PROPOSAL 1, "FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.
IF A NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PERSONS
NAMED IN THIS PROXY SHALL HAVE DISCRETIONARY AUTHORITY TO VOTE FOR A
SUBSTITUTE NOMINEE DESIGNATED BY THE BOARD OF DIRECTORS (UNLESS AUTHORITY TO
VOTE FOR NOMINEES HAS BEEN WITHHELD).

                (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)

                   TRIANGLE FOLD AND DETACH HERE TRIANGLE



          Whether or not you are able to attend the Annual Meeting of
     Shareholders, it is important that your shares be represented.
     Accordingly, please complete and sign the proxy card printed above,
     tear at the perforation, and mail the card in the enclosed postage
     paid envelope addressed to Telephone and Data Systems, Inc.,
     c/o Harris Trust and Savings Bank.


              [Series A Common Stock -- Green Ink]

<PAGE>

                     TELEPHONE AND DATA SYSTEMS, INC.
   PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/

[                                                                              ]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1,
"FOR" PROPOSAL 2, AND "AGAINST" PROPOSAL 3.

                                           FOR         WITHHOLD         FOR ALL
                                           ALL           ALL            EXCEPT

1. Election of Class I Directors           / /            / /             / /
   (Nominees: 01-J. Barr III,
   02-S. Helton and 03-G. Off)

                         _________________________________
                         (Except nominee(s) written above


                                           FOR          AGAINST         ABSTAIN
2. Ratify Accountants for 2000             / /            / /             / /

                                           FOR          AGAINST         ABSTAIN
3. Shareholder Proposal                    / /            / /             / /

4. In accordance with their discretion,
   to vote upon all other matters that
   may properly come before said Annual
   Meeting and any adjournment thereof,
   including matters incidental to the
   conduct of the meeting.

                                              Dated: ___________________, 2000

                                              Please Sign Here ________________

                                              _________________________________
                                              NOTE:  Please date this proxy
                                              and sign it exactly as your
                                              name or names appear. All joint
                                              owners of shares should sign.
                                              State full title when signing
                                              as executor, administrator,
                                              trustee, guardian, etc. Please
                                              return signed proxy in the
                                              enclosed envelope.

                  TRIANGLE  FOLD AND DETACH HERE  TRIANGLE


          Whether or not you are able to attend the Annual Meeting of
     Shareholders, it is important that your shares be represented.
     Accordingly, please complete and sign the proxy card printed above,
     tear at the perforation, and mail the card in the enclosed postage
     paid envelope addressed to Telephone and Data Systems, Inc., c/o Harris
     Trust and Savings Bank.

                [Series A Common Stock -- Green Ink]

<PAGE>

PROXY                                                                     PROXY

     PROXY FOR PREFERRED SHARES ISSUED AFTER OCTOBER 31, 1981 SOLICITED ON
 BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
                        TELEPHONE AND DATA SYSTEMS, INC.
                          TO BE HELD ON MAY 19, 2000

     The undersigned hereby appoints LeRoy T. Carlson, Jr., and Donald C.
Nebergall, or either of them acting in the absence of the other, with power
of substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of Preferred Shares issued after October 31,
1981 that the undersigned would be entitled to vote if then personally
present at the 2000 Annual Meeting of the Shareholders of Telephone and Data
Systems, Inc., to be held on Friday, May 19, 2000, or at any adjournment
thereof, as set forth in the accompanying Notice of Annual Meeting and Proxy
Statement, receipt of which is hereby acknowledged, as designated on the
reverse side hereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1,
"FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE NOMINEES IN PROPOSAL 1, "FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.
IF A NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PERSONS
NAMED IN THIS PROXY SHALL HAVE DISCRETIONARY AUTHORITY TO VOTE FOR A
SUBSTITUTE NOMINEE DESIGNATED BY THE BOARD OF DIRECTORS (UNLESS AUTHORITY TO
VOTE FOR THE NOMINEES HAS BEEN WITHHELD).

                     (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)

               TRIANGLE FOLD AND DETACH HERE TRIANGLE

     Whether or not you are able to attend the Annual Meeting of
Shareholders, it is important that your shares be represented. Accordingly,
please complete and sign the proxy card printed above, tear at the
perforation, and mail the card in the enclosed postage paid envelope
addressed to Telephone and Data Systems, Inc., c/o Harris Trust and Savings
Bank.



               [Preferred After 10/31 -- Blue Ink]
<PAGE>

PROXY                                                                     PROXY

                       TELEPHONE AND DATA SYSTEMS, INC.
    PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/

[                                                                              ]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1,
           "FOR" PROPOSAL 2, AND "AGAINST" PROPOSAL 3.

                                    FOR     WITHHOLD   FOR ALL
                                    ALL       ALL      EXCEPT

1. Election of Class I Directors     / /       / /        / /
   (Nominees: 01-J. Barr III,
   02-S. Helton and 03-G. Off)



                                  ________________________________
                                  (Except nominee(s) written above)


2. Ratify Accountants for 2000     FOR      AGAINST   ABSTAIN

                                   / /        / /       / /


3. Shareholder Proposal            FOR      AGAINST   ABSTAIN

                                   / /        / /       / /





4. In accordance with their
   discretion, to vote upon all
   other matters that may properly
   come before said Annual Meeting
   and any adjournment thereof,
   including matters incidental to
   the conduct of the meeting.



                                         Dated:____________________, 2000


                                         Please Sign Here:_______________

                                                          _______________

                                         NOTE: Please date this proxy and
                                         sign it exactly as your name or
                                         names appear. All joint owners
                                         of shares should sign. State full
                                         title when signing as executor,
                                         administrator, trustee, guardian,
                                         etc. Please return signed proxy
                                         in the enclosed envelope.




               TRIANGLE FOLD AND DETACH HERE TRIANGLE


     Whether or not you are able to attend the Annual Meeting of
Shareholders, it is important that your shares be represented. Accordingly,
please complete and sign the proxy card printed above, tear at the
perforation, and mail the card in the enclosed postage paid envelope
addressed to Telephone and Data Systems, Inc., c/o Harris Trust and Savings
Bank.


               [Preferred After 10/31 -- Blue Ink]
<PAGE>

PROXY                                                                     PROXY

    PROXY FOR PREFERRED SHARES ISSUED BEFORE OCTOBER 31, 1981 SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
                      TELEPHONE AND DATA SYSTEMS, INC.
                          TO BE HELD ON MAY 19, 2000

The undersigned hereby appoints LeRoy T. Carlson, Jr., and Donald C.
Nebergall, or either of them acting in the absence of the other, with power
of substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of Preferred Shares issued before October 31,
1981 that the undersigned would be entitled to vote if then personally
present at the 2000 Annual Meeting of the Shareholders of Telephone and Data
Systems, Inc., to be held on Friday, May 19, 2000, or at any adjournment
thereof, as set forth in the accompanying Notice of Annual Meeting and Proxy
Statement, receipt of which is hereby acknowledged, as designated on the
reverse side hereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE IN PROPOSAL 1,
"FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEE IN PROPOSAL 1, "FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3. IF THE NOMINEE
IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PERSONS NAMED IN THIS
PROXY SHALL HAVE DISCRETIONARY AUTHORITY TO VOTE FOR A SUBSTITUTE NOMINEE
DESIGNATED BY THE BOARD OF DIRECTORS (UNLESS AUTHORITY TO VOTE FOR NOMINEES HAS
BEEN WITHHELD).

                  (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)

                     TRIANGLE FOLD AND DETACH HERE TRIANGLE

              Whether or not you are able to attend the Annual
         Meeting of Shareholders, it is important that your shares
         be represented. Accordingly, please complete and sign the
         proxy card printed above, tear at the perforation, and
         mail the card in the enclosed postage paid envelope
         addressed to Telephone and Data Systems, Inc., c/o Harris
         Trust and Savings Bank.


                [Preferred Prior to 10/31 -- Red Ink]
<PAGE>

                        TELEPHONE AND DATA SYSTEMS, INC.
    PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE IN PROPOSAL 1, "FOR"
PROPOSAL 2, AND "AGAINST" PROPOSAL 3.
<TABLE>
<CAPTION>
                                    FOR    WITHHOLD

<S>                                 <C>    <C>
1.   Election of Class I Director
     (Nominee: M.Solomon)           / /      / /
</TABLE>

<TABLE>
<CAPTION>

                                    FOR    AGAINST  ABSTAIN
<S>                                 <C>    <C>      <C>
2.   Ratify Accountants for
     2000                           / /      / /      / /
</TABLE>

<TABLE>
<CAPTION>

                                    FOR    AGAINST  ABSTAIN
<S>                                 <C>    <C>      <C>
3.   Shareholder Proposal           / /      / /       / /
</TABLE>

4. In accordance with their discretion, to
   vote upon all other matters that may
   properly come before said Annual
   Meeting and any adjournment thereof,
   including matters incidental to the
   conduct of the meeting.


                                      Dated: __________________________, 2000

                                      Please Sign Here: _______________________

                                      _________________________________________
                                      Note: Please date this proxy and sign it
                                      exactly as your name or names appear. All
                                      joint owners of shares should sign. State
                                      full title when signing as executor,
                                      administrator, trustee, guardian, etc.
                                      Please return signed proxy in the
                                      enclosed envelope.

                   TRIANGLE FOLD AND DETACH HERE TRIANGLE

         Whether or not you are able to attend the Annual Meeting of
    Shareholders, it is important that your shares be represented.
    Accordingly, please complete and sign the proxy card printed above,
    tear at the perforation, and mail the card in the enclosed postage paid
    envelope addressed to Telephone and Data Systems, Inc., c/o Harris
    Trust and Savings Bank.



                 [Preferred Prior to 10/31 -- Red Ink]
<PAGE>

PROXY                                                                     PROXY

                      PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF
           THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
                          TELEPHONE AND DATA SYSTEMS, INC.
                            TO BE HELD ON MAY 19, 2000

    The undersigned hereby appoints LeRoy T. Carlson, Jr., and Donald C.
Nebergall, or either of them acting in the absence of the other, with power
of substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of Common Shares that the undersigned would
be entitled to vote if then personally present at the 2000 Annual Meeting of
the Shareholders of Telephone and Data Systems, Inc., to be held on Friday,
May 19, 2000, or at any adjournment thereof, as set forth in the accompanying
Notice of Annual Meeting and Proxy Statement, receipt of which is hereby
acknowledged, as designated on the reverse side hereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE IN PROPOSAL 1,
"FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE NOMINEE IN PROPOSAL 1, "FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3.
IF A NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PERSONS
NAMED IN THIS PROXY SHALL HAVE DISCRETIONARY AUTHORITY TO VOTE FOR A
SUBSTITUTE NOMINEE DESIGNATED BY THE BOARD OF DIRECTORS (UNLESS AUTHORITY TO
VOTE FOR NOMINEES HAS BEEN WITHHELD).

                    (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)

                      TRIANGLE  FOLD AND DETACH HERE  TRIANGLE

     Whether or not you are able to attend the Annual Meeting of
Shareholders, it is important that your shares be represented. Accordingly,
please complete and sign the proxy card printed above, tear at the
perforation, and mail the card in the enclosed postage paid envelope
addressed to Telephone and Data Systems, Inc., c/o Harris Trust and Savings
Bank.

<PAGE>

                       TELEPHONE AND DATA SYSTEMS, INC.
   PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/

[                                                                              ]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE IN PROPOSAL 1,
            "FOR" PROPOSAL 2, AND "AGAINST" PROPOSAL 3.

                                    FOR     WITHHOLD
1. Election of Class I Director     / /       / /
   (Nominee: M. Solomon)





                                   FOR      AGAINST   ABSTAIN
2. Ratify Accountants for 2000     / /        / /       / /

                                   FOR      AGAINST   ABSTAIN
3. Shareholder Proposal            / /        / /       / /



4. In accordance with their
   discretion, to vote upon all
   other matters that may properly
   come before said Annual Meeting
   and any adjournment thereof,
   including matters incidental to
   the conduct of the meeting.



                                         Dated:____________________, 2000

                                         Please Sign Here _______________

                                         _________________________________

                                         NOTE: Please date this proxy and
                                         sign it exactly as your name or
                                         names appear. All joint owners
                                         of shares should sign. State full
                                         title when signing as executor,
                                         administrator, trustee, guardian,
                                         etc. Please return signed proxy
                                         in the enclosed envelope.




                   TRIANGLE  FOLD AND DETACH HERE  TRIANGLE


     Whether or not you are able to attend the Annual Meeting of
Shareholders, it is important that your shares be represented. Accordingly,
please complete and sign the proxy card printed above, tear at the
perforation, and mail the card in the enclosed postage paid envelope
addressed to Telephone and Data Systems, Inc., c/o Harris Trust and Savings
Bank.



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