Shares of Telephone & Data Systems Inc. TDS declined nearly 10% to close at $26.76 on May 6, following an unimpressive quarterly release wherein both the top and the bottom line failed to beat the Zacks Consensus Estimate.GAAP net income in the first quarter of 2016 was $8 million or 7 cents per share compared with $146 million or $1.33 in the year-ago quarter. Quarterly earnings per share of 7 cents were significantly below the Zacks Consensus Estimate of 14 cents.Revenues also fell 0.7% year over year to $1,243 million in the reported quarter, lagging the Zacks Consensus Estimate of $1,253 million. Operating expenses were $1,228 million, up 26.7% year over year. The company reported quarterly operating income of $15 million compared with $283 million recorded in the year-ago quarter.U.S. Cellular DivisionThe company’s wireless subsidiary United States Cellular Corp. USM reported first-quarter 2016 earnings per share of 10 cents, lagging the Zacks Consensus Estimate of 23 cents.First-quarter revenues of $958 million were down 0.7% year over year and also lagged the Zacks Consensus Estimate of $972 million. Quarterly Service revenues decreased 8.2% to $760 million. Revenues from Equipment sales were up 44.5% to $198 million.Smartphone sales retained its strength and represented 75% penetration among postpaid customers, up from 67% recorded in the year-ago quarter. Total cell sites in service were 6,306 compared with 6,219 in the year-ago quarter. Smartphones sold, as a percentage of total handsets sold, constituted 92% against 86% in the prior-year quarter.U.S. Cellular exited the first quarter with a subscriber base of 4,926,000 compared with 4,775,000 at the end of the year-ago quarter. Postpaid subscriber base was 4,454,000 against 4,307,000 at the end of the prior-year quarter. Meanwhile, prepaid subscriber base totaled 399,000 compared with 360,000 at the end of the year-ago quarter. In the reported quarter, U.S. Cellular added a net of 45,000 postpaid subscribers compared with 9,000 in the year-ago quarter. The company also gained 12,000 prepaid customers in the same quarter, similar to the prior-year quarter figure.TDS DivisionIn the reported quarter, total revenue came in at $281 million, unchanged from the prior-year quarter figure. Within the segment, revenues from the wireline segment came in at $173 million, down 1.7% year over year. Cable revenues climbed 2.3% to $45 million while HMS revenues increased 4.9% to $64 million.At the end of the reported quarter, TDS division had 585,800 (down 0.4% year over year) wireline residential customers, 337,900 (down 4.8%) wireline commercial customers and 284,400 (up 4.9%) cable connections. Wireline residential revenue per connection stood at $43.28, up 2.3% year over year.Cash FlowIn first-quarter 2016, Telephone & Data Systems generated $246 million of cash from operations compared with $355 million in the prior-year quarter. Quarterly adjusted free cash flow was $89 million compared with a $205 million in the year-earlier quarter. LiquidityTelephone & Data Systems exited the quarter with cash and marketable securities of $1,054 million compared with $985 million at the end of 2015. At first-quarter end, total debt was $2,451 million versus $2,454 million at 2015-end. At quarter-end, the debt-to-capitalization ratio stood at 0.34, flat with the end-2015 figure.GuidanceFor full-year 2016, the TDS division projects total operating revenue in the range of $1,130–$1,180 million. Both operating cash flow and adjusted EBITDA are estimated in the band of $270–$310 million while capital expenditure is forecasted at around $180 million.Zacks Rank & Stocks to ConsiderTelephone & Data Systems currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector are BCE Inc. BCE and TELUS Corporation TU. Both the stocks sport a Zacks Rank #1 (Strong Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TELUS CORP (TU): Free Stock Analysis Report BCE INC (BCE): Free Stock Analysis Report TELEPHONE &DATA (TDS): Free Stock Analysis Report US CELLULAR (USM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research