UScellular reports third quarter 2024 results
CHICAGO, Nov. 1, 2024 /PRNewswire/ --
As previously announced, UScellular will hold a teleconference on November 1, 2024, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.uscellular.com.
United States Cellular Corporation (NYSE:USM) reported total operating revenues of $922 million for the third quarter of 2024, versus $963 million for the same period one year ago. Service revenues totaled $747 million, versus $762 million for the same period one year ago. Net income (loss) attributable to UScellular shareholders and related diluted earnings (loss) per share were $(79) million and $(0.92), respectively, for the third quarter of 2024 compared to $23 million and $0.26, respectively, in the same period one year ago.
Net income attributable to UScellular shareholders excluding a 2024 license impairment (non-GAAP) of $136 million ($102 million, net of tax) and related Diluted earnings (loss) per share attributable to UScellular shareholders excluding a 2024 license impairment (non-GAAP) were $23 million and $0.26, respectively, for both the third quarter of 2024 and 2023. The impairment loss was substantially all related to the retained high-band spectrum unit of accounting which includes the 28 GHz, 37 GHz and 39 GHz frequency bands.
Recent Highlights*
Announced sale of select spectrum assets for $1 billion to Verizon in October 2024, and the sale of additional spectrum to two other mobile operators
Improved wireless operating results
Postpaid handset net losses improved
Postpaid ARPU grew 2%; service revenues decreased 2%
Prepaid net additions up
Both postpaid and prepaid churn improved
Fixed wireless customers grew 32% to 140,000
* Comparisons are 3Q'23 to 3Q'24 unless otherwise noted
"Postpaid handset results improved year-over-year due to our promotional and retention actions," said Laurent C. Therivel, UScellular President and CEO. "While overall postpaid handset net adds remained negative, I am pleased with our improving subscriber trajectory. Solid postpaid ARPU growth coupled with strong expense discipline gives us confidence to raise our 2024 Adjusted EBITDA guidance.
"Given that our network investments over the past few years have resulted in strong 5G coverage in our footprint, future network investments are expected to predominately focus on the deployment of our mid-band spectrum to enhance speed and capacity.
"Additionally, I am very pleased that we recently announced agreements with multiple mobile network operators for the sale of portions of our retained spectrum licenses in exchange for proceeds of $1 billion. These transactions are part of our objective to opportunistically monetize the spectrum not included in the proposed T-Mobile transaction."
Announced Transactions and Exploration of Strategic Alternatives for UScellularOn May 28, 2024, Telephone and Data Systems, Inc. (TDS) and UScellular announced that they have entered into a definitive agreement to sell UScellular's wireless operations and select spectrum assets to T-Mobile. The transaction is expected to close in mid-2025, subject to regulatory approvals and the satisfaction of customary closing conditions.
The T-Mobile transaction excluded UScellular's approximately 4,400 owned towers, its equity method investments, and approximately 70% of its spectrum assets.
In October, UScellular announced a sale of select spectrum assets to Verizon for a portion of the remaining spectrum for $1 billion, and the sale of additional spectrum to two other mobile network operators for an undisclosed price. Each transaction is subject to regulatory approvals and the satisfaction of customary closing conditions and contingent upon the close of the proposed T-Mobile transaction. The process to opportunistically monetize the remaining spectrum assets continues.
2024 Estimated Results
UScellular's current estimates of full-year 2024 results are shown below. Such estimates represent management's view as of November 1, 2024 and should not be assumed to be current as of any future date. UScellular undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.
2024 Estimated Results
Previous
Current
(Dollars in millions)
Service revenues
$2,950-$3,050
$2,950-$3,000
Adjusted OIBDA1, 2 (Non-GAAP)
$750-$850
$800-$875
Adjusted EBITDA1, 2 (Non-GAAP)
$920-$1,020
$970-$1,045
Capital expenditures
$550-$650
$550-$600
The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income (loss) or Income (loss) before income taxes. In providing 2024 estimated results, UScellular has not completed the below reconciliation to Net income (loss) because it does not provide guidance for income taxes. Although potentially significant, UScellular believes that the impact of income taxes cannot be reasonably predicted; therefore, UScellular is unable to provide such guidance.
Actual Results
2024 Estimated Results2
Nine Months Ended
September 30, 2024
Year EndedDecember 31, 2023
(Dollars in millions)
Net income (loss) (GAAP)
N/A
($37)
$58
Add back:
Income tax expense
N/A
29
53
Income (loss) before income taxes (GAAP)
$(35)-$40
($8)
$111
Add back:
Interest expense
180
137
196
Depreciation, amortization and accretion expense
665
499
656
EBITDA (Non-GAAP)1
$810-$885
$628
$963
Add back or deduct:
Expenses related to strategic alternatives review
—
28
8
Loss on impairment of licenses
135
136
—
(Gain) loss on asset disposals, net
20
14
17
(Gain) loss on license sales and exchanges, net
5
4
(2)
Adjusted EBITDA (Non-GAAP)1
$970-$1,045
$810
$986
Deduct:
Equity in earnings of unconsolidated entities
160
123
158
Interest and dividend income
10
9
10
Adjusted OIBDA (Non-GAAP)1
$800-$875
$678
$818
1
EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. UScellular does not intend to imply that any such items set forth in the reconciliation above are infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of UScellular's operating results before significant recurring non-cash charges, nonrecurring expenses, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of UScellular's financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, gains and losses, and expenses related to the strategic alternatives review of UScellular while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for September 30, 2024, can be found on UScellular's website at investors.uscellular.com.
2
2024 Estimated Results do not reflect any anticipated costs, expenses or results of the strategic alternatives review referenced above.
Stock RepurchaseDuring the third quarter of 2024, UScellular repurchased 474,074 of its Common Shares for $26 million.
Conference Call InformationUScellular will hold a conference call on November 1, 2024 at 9:00 a.m. Central Time.
Access the live call on the Events & Presentations page of investors.uscellular.com or at https://events.q4inc.com/attendee/666898854
Access the call by phone at (888)330-2384 conference ID: 1328528.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.
About UScellularUnited States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.5 million retail connections in 21 states. The Chicago-based company had 4,200 full- and part-time associates as of September 30, 2024. At the end of the third quarter of 2024, Telephone and Data Systems, Inc. owned approximately 83 percent of UScellular. For more information about UScellular, visit uscellular.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: whether the announced transactions whereby UScellular has agreed to sell its wireless operations and selected spectrum assets will be successfully completed or whether UScellular will be able to find buyers at mutually agreeable prices for its remaining spectrum assets; whether any such strategic alternative will result in additional value for UScellular and its shareholders and whether the process will have an adverse impact on UScellular's business; strategic decisions regarding the tower business; intense competition; the ability to attract people of outstanding talent throughout all levels of the organization; UScellular's smaller scale relative to larger competitors; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which UScellular does business; uncertainties in UScellular's future cash flows and liquidity and access to the capital markets; the ability to make payments on UScellular indebtedness or comply with the terms of debt covenants; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment, including changes in regulatory support received and the ability to pass through regulatory fees to customers; pending and future litigation; cyber-attacks or other breaches of network or information technology security; potential conflicts of interests between TDS and UScellular; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; and the impact, duration and severity of public health emergencies. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under "Risk Factors" in the most recent filing of UScellular's Form 10-K, as updated by any UScellular Form 10-Q filed subsequent to such Form 10-K.
For more information about UScellular, visit: www.uscellular.com
United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended
9/30/2024
6/30/2024
3/31/2024
12/31/2023
9/30/2023
Retail Connections
Postpaid
Total at end of period1
3,999,000
4,027,000
4,051,000
4,106,000
4,159,000
Gross additions
123,000
117,000
106,000
129,000
128,000
Handsets
84,000
73,000
63,000
80,000
84,000
Connected devices
39,000
44,000
43,000
49,000
44,000
Net additions (losses)1
(28,000)
(24,000)
(44,000)
(50,000)
(35,000)
Handsets
(28,000)
(29,000)
(47,000)
(53,000)
(38,000)
Connected devices
—
5,000
3,000
3,000
3,000
ARPU2
$ 52.04
$ 51.45
$ 51.96
$ 51.61
$ 51.11
ARPA3
$ 131.81
$ 130.41
$ 132.00
$ 131.63
$ 130.91
Handset upgrade rate4
3.5 %
4.1 %
4.5 %
5.8 %
4.5 %
Churn rate5
1.25 %
1.16 %
1.22 %
1.44 %
1.30 %
Handsets
1.07 %
0.97 %
1.03 %
1.22 %
1.11 %
Connected devices
2.47 %
2.47 %
2.52 %
3.03 %
2.64 %
Prepaid
Total at end of period1
452,000
439,000
436,000
451,000
462,000
Gross additions
57,000
50,000
41,000
43,000
52,000
Net additions (losses)1
13,000
3,000
(13,000)
(11,000)
—
ARPU2, 6
$ 32.01
$ 32.37
$ 32.25
$ 32.32
$ 33.44
Churn rate5
3.30 %
3.60 %
4.06 %
3.87 %
3.68 %
Market penetration at end of period
Consolidated operating population
32,550,000
32,550,000
32,550,000
32,350,000
32,350,000
Consolidated operating penetration7
15 %
15 %
14 %
15 %
15 %
Capital expenditures (millions)
$ 120
$ 165
$ 131
$ 148
$ 111
Total cell sites in service
7,007
6,990
6,995
7,000
6,973
Owned towers
4,407
4,388
4,382
4,373
4,356
Number of colocations8
2,418
2,392
2,397
2,390
2,406
Tower tenancy rate9
1.55
1.55
1.55
1.55
1.55
1
First quarter 2024 connections were adjusted to remove subscribers that could no longer access the UScellular network due to the CDMA shutdown. This resulted in 11,000 and 2,000 subscribers removed from the postpaid and prepaid base, respectively, that are not included in Net additions (losses) for the quarter.
2
Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below:
3
Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.
4
Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections.
5
Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.
6
Fourth quarter 2023 Prepaid ARPU excludes a $6 million reduction of prepaid revenue related to an adjustment to correct a prior period error recorded in the fourth quarter of 2023.
7
Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets.
8
Represents instances where a third-party wireless carrier rents or leases space on a company-owned tower.
9
Average number of tenants that lease space on company-owned towers, measured on a per-tower basis.
United States Cellular Corporation
Consolidated Statement of Operations Highlights
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
vs. 2023
2024
2023
2024
vs. 2023
(Dollars and shares in millions, except per share amounts)
Operating revenues
Service
$ 747
$ 762
(2) %
$ 2,245
$ 2,289
(2) %
Equipment sales
175
201
(13) %
