Investments in Unconsolidated Entities

Investments in unconsolidated entities consist of amounts invested in wireless and wireline entities in which TDS holds a noncontrolling interest. On January 1, 2018, TDS adopted Accounting Standards Update 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) using the modified retrospective approach. Accordingly, prior periods have not been recast to reflect the new accounting principle. Equity securities are measured at fair value with changes in value recognized in Net income. The cumulative effect of applying the provisions of ASU 2016-01 resulted in an increase of $1 million in retained earnings as of January 1, 2018.

TDS’ Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The measurement alternative fair value represents cost minus any impairments plus or minus any observable price changes. TDS did not have an impairment or observable price change related to these investments for the three and nine months ended September 30, 2018.



	September 30, 2018		December 31, 2017
(Dollars in millions)
Equity method investments	$	481	$	435
Measurement alternative method investments	19		18
Total investments in unconsolidated entities	$	500	$	453

The following table, which is based in part on information provided by third parties, summarizes the combined results of operations of TDS’ equity method investments.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
(Dollars in millions)
Revenues	$	1,699		$	1,596		$	5,023		$	4,848
Operating expenses	1,234			1,184			3,651			3,631
Operating income	465			412			1,372			1,217
Other income (expense), net	(3		)	(2		)	(3		)	(4		)
Net income	$	462		$	410		$	1,369		$	1,213