US Cellular Reports Q2

Smartphones sold, as a percent of total devices sold, increased to 39.6% from 15.8%

August 8, 2011

2 Min Read

CHICAGO -- United States Cellular Corporation [NYSE:USM] reported service revenues of$1,002.0 million for the second quarter of 2011, versus $972.6 million in the comparable period one year ago.Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $73.9 millionand $0.87, respectively, for the second quarter of 2011, compared to $40.8 million and $0.47, respectively, inthe comparable period one year ago.

“We continued to increase postpaid ARPU and maintain a low churn rate,” said Mary N. Dillon, U.S. Cellularpresident and CEO, “although our subscriber results continue to reflect the intense competitive environmentand the weak economy. This remains our greatest challenge. Our new advertising and marketing strategiesare starting to increase awareness among potential switchers, and we’re working hard to break through to ourtarget customers and leverage that awareness to improve gross additions.

“Smartphones sales continued to be strong, and we also saw an increase in sales of data plans for featurephones in the quarter. By balancing device subsidies among a wider range of both feature phones andsmartphones, we were able to better control our loss on equipment. Overall, operating margins improved in thequarter due to higher ARPU, increased roaming revenue and good expense control, with fewer gross additionscontributing to lower sales and marketing expenses.

“We now have 2.3 million customers on our Belief Plans, and we’re complementing those plans with some veryexciting phones and devices. This quarter we added the new HTC 7 ProTM with Windows Phone 7®, the newAndroidTM-powered HTC Merge™ Global Ready smartphone, and the Motorola Xoom™ tablet. And we havemore feature-packed phones, smartphones and tablets on the way. We’re also excited about our cominglaunch of 4G.”

Second quarter transactions

U.S. Cellular paid $24.6 million in cash to purchase the remaining interest in a wireless business in which itpreviously held a non-controlling interest. As a result, the company recorded a $13.4 million pre-tax gain oninvestments.

Additionally, U.S. Cellular sold $342 million of 6.95 percent senior notes and redeemed $330 million of its 7.5percent senior notes. The redemption required U.S. Cellular to write off $8.2 million of previously capitalizeddebt issuance costs related to the 7.5 percent senior notes. The $8.2 million was recorded in interest expense.

Guidance for year ending Dec. 31, 2011

Guidance for the year ending Dec. 31, 2011, as of Aug. 8, 2011, is provided below, compared to the previousguidance provided on May 6, 2011. U.S. Cellular undertakes no duty to update such information, whether as aresult of new information, future events, or otherwise. There can be no assurance that final results will notdiffer materially from this guidance.

U.S. Cellular Corp. (NYSE: USM)

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