U.S. Cellular Reports Second Quarter 2012 Results

CHICAGO, Aug. 3, 2012 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

2Q 2012 Highlights

  • Smartphones as a percent of total devices sold increased to 51.9 percent from 39.6 percent; smartphone customers increased to 36.8 percent of postpaid customers from 23.1 percent.
  • Postpaid ARPU (average revenue per user) increased 5 percent to $54.42 from $51.84; total ARPU increased 6 percent to $59.05 from $55.69.
  • Service revenues increased 3 percent to $1,029.7 million.
  • Postpaid gross additions increased 9 percent and postpaid churn increased to 1.57 percent, resulting in a net loss of 48,000 postpaid customers.  Postpaid customers comprised 94 percent of retail customers.
  • Prepaid gross additions increased 77 percent, driven by the introduction in select Walmart stores of U Prepaid, a new no contract wireless service, and prepaid churn decreased to 6.2 percent, resulting in a net increase of 20,000 prepaid customers.
  • Retail gross additions increased 23 percent; net loss of 28,000 retail customers, compared to a net loss of 58,000 retail customers.
  • Cell sites in service increased 2 percent to 7,932, of which 4,512 are owned towers.
  • 4G LTE network covers 30 percent of customers; expect to reach 58 percent of customers by year end.
  • Investment in the Los Angeles Partnership contributed $19 million to equity in earnings of unconsolidated entities, up from $14 million.

As previously announced, U.S. Cellular will hold a teleconference Aug. 3, 2012 at 9:30 a.m. CDT. Interested parties may listen to the call live by accessing the Investor Relations page of www.uscellular.com or www.teldta.com.

United States Cellular Corporation (NYSE: USM) reported service revenues of $1,029.7 million for the second quarter of 2012, up 3 percent versus $1,002.0 million in the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $52.7 million and $0.62, respectively, for the second quarter of 2012, compared to $74.9 million and $0.88, respectively, in the comparable period one year ago.

"Our second quarter results were mixed," said Mary N. Dillon, U.S. Cellular president and CEO. "We achieved a strong increase in postpaid gross customer additions, evidence that we are increasing awareness and convincing wireless consumers to switch to U.S. Cellular. Postpaid churn, however, remained elevated, resulting in a net loss of postpaid subscribers. We're focused on improving our subscriber results by implementing aggressive strategies to offer high-demand devices, expand our distribution options, and further differentiate U.S. Cellular's superior customer service and benefits.  Profitability in the quarter declined, however, due to higher device subsidies on 4G LTE handsets and expenses related to data growth, expansion of the 4G LTE network and spending for our multi-year initiatives. 

"Our positive prepaid customer results reflect the success we've had selling our U Prepaid service through Walmart since mid-May. We will continue to find new ways to optimize our distribution and be where our customers want to shop.

"Revenues grew in the quarter as smartphone penetration continued to increase, contributing to strong data use and increased average revenue per user. 4G LTE devices made up 17 percent of smartphones sold, and we expect to continue to migrate customers to our expanding 4G LTE network by offering devices like the highly acclaimed Samsung Galaxy S® III.

"To continue our positive momentum related to gross additions, our newly launched marketing campaign, Hello Better, takes an aggressive approach to encouraging our competitors' customers to break free from unrewarding provider relationships. We'll be utilizing a full range of traditional, social, retail and grassroots tools to reach out to customers who are unhappy with their current providers, and show them there's a better option with U.S. Cellular."

Interest expense

The $12.8 million decrease in interest expense was due primarily to the write-off of $8.2 million in unamortized debt issuance costs in 2011 and lower interest rates on outstanding debt.

Guidance for year ending Dec. 31, 2012                             

Guidance for the year ending Dec. 31, 2012, as of Aug. 3, 2012, is unchanged from the previous guidance provided on May 4, 2012. U.S. Cellular undertakes no duty to update such information, whether as a result of new information, future events, or otherwise.  There can be no assurance that final results will not differ materially from this guidance. 

2012 Estimated Results (1)

Service revenues

$4,050-$4,150 million

Operating income (2)

$200-$300 million

Depreciation, amortization and accretion expenses,

   and losses on asset disposals and exchanges 

   and impairment of assets (2)

Approx. $600 million

Adjusted OIBDA (2) (3)

$800-$900 million

Capital expenditures

Approx. $850 million


These estimates are based on U.S. Cellular's current plans, which include a multi-year deployment of 4G LTE technology which commenced in 2011.  New developments or changing conditions (such as customer net growth, customer demand for data services or possible acquisitions, dispositions or exchanges) could affect U.S. Cellular's plans and, therefore, its 2012 estimated results.   


The 2012 Estimated Results do not include any estimate for unrecognized net gains or losses related to disposals and exchanges of assets or losses on impairment of assets (since such transactions and their effects are uncertain).


Adjusted OIBDA is defined as operating income excluding the effects of depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals and exchanges (if any); and the loss on impairment of assets (if any). This measure also may be commonly referred to by management as operating cash flow. This measure should not be confused with Cash flows from operating activities, which is a component of the Consolidated Statement of Cash Flows.  Adjusted OIBDA excludes the net gain or loss on asset disposals and exchanges (if any) and loss on impairment of assets (if any), in order to show operating results on a more comparable basis from period to period.  U.S. Cellular does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual and, accordingly, they may be incurred in the future.  U.S. Cellular believes this measure provides useful information to investors regarding U.S. Cellular's financial condition and results of operations because it highlights certain key cash and non-cash items and their impacts on cash flows from operating activities.

Conference call information

U.S. Cellular will hold a conference call on Aug. 3, 2012 at 9:30 a.m. CDT.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Investor Relations page of www.uscellular.com. The call will be archived on the Conference Calls page of www.uscellular.com.

About U.S. Cellular

United States Cellular Corporation, the nation's seventh-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 5.8 million customers in 26 states. The Chicago-based company employed approximately 8,600 people as of June 30, 2012. At the end of the second quarter of 2012, Telephone and Data Systems, Inc. owned 84 percent of U.S. Cellular.

Visit www.uscellular.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.