U.S. Cellular posted a strong third quarter as subscriber adds increased nearly 6 percent giving the carrier a subscriber base of 6.7 million. Service revenues were up 16.1 percent to $954.5 million from $821.8 million during the quarter last year. Operating income was also up 30.5 percent to $100.9 million. Net income was $63.1 million, up from $35.9 million this time last year. U.S. Cellular’s ARPU figure was $52.71 after a 10 percent increase year-over-year. Data revenues also grew a whopping 66 percent to $96.8 million, or 10.1 percent of service revenues.
CHICAGO, United States Cellular Corporation (Amex: USM) reported service revenues of $954.5 million for the third quarter of 2007, up 16.1 percent from $821.8 million for the comparable period one year ago. The company recorded operating income of $100.9 million, up 30.5 percent from $77.3 million for the third quarter of 2006. Net income and diluted earnings per share were $63.6 million and $0.72, respectively, compared to net income and diluted earnings per share of $35.9 million and $0.41, respectively, for the comparable period one year ago.
“This quarter we had strong service revenues growth of 16 percent, as well as a 31 percent increase in operating income,” said John E. Rooney, president and chief executive officer. “In addition, cash flows from operating activities were $181.3 million. There were a number of factors contributing to our success this quarter. For one, data revenues continue to be a strong revenue growth driver for U.S. Cellular, growing 66 percent this quarter to $97 million. Data revenues now account for more than 10 percent of service revenues and helped average revenue per unit, or ARPU, increase by 10 percent, to $52.71. In addition, the popularity of our national and wide area calling plans helped to increase ARPU as more than half of our customer base has shifted to these high-value plans. We expect these trends to continue.
“We also continue to see results from our customer satisfaction strategy and high-quality network,” continued Rooney. “We recently received our fourth consecutive award from J.D. Power and Associates for call quality in the North Central region. The award highlights both our associates’ efforts to provide the best customer service and our commitment to ensuring a high-quality call experience. Our retail postpay churn rate of 1.6 percent, down from 1.7 percent in the third quarter of 2006, reflects this commitment.”
Net Customer Additions
The company acquired 73,000 net retail postpay customers in the quarter. Postpay customers are the cornerstone of U.S. Cellular’s customer acquisition and satisfaction strategy and comprise 95 percent of the retail customer base. The number of prepay customers declined 21,000. The company also acquired 5,000 net reseller customers.
Share Repurchases
On April 4, 2007, U.S. Cellular entered into an agreement with an investment banking firm to purchase 670,000 of its common shares through an accelerated share repurchase (“ASR”) for approximately $49 million. On July 10, 2007, U.S. Cellular entered into an additional agreement with the same firm to purchase 168,000 of its common shares through an ASR for approximately $16 million.
In addition, on Oct. 25, 2007, U.S. Cellular entered into a third agreement with the same firm to purchase 168,000 of its common shares through an ASR for approximately $16 million.
Guidance
Guidance for the year ending Dec. 31, 2007 is as follows. There can be no assurance that final results will not differ materially from this guidance.
Conference Call Information
As previously announced, U.S. Cellular will hold a teleconference Nov. 6, 2007, at 10:00 a.m. Chicago time. Interested parties may listen to the call live via the Internet by accessing http://www.videonewswire.com/event.asp?id=43702 or visiting the Conference Calls page of http://www.uscc.com. To connect by phone, call 800/706-9695 (US/Canada) and use conference ID #22669548. The call will be archived on the Conference Calls page of http://www.uscc.com.
Prior to the start of the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Call page of http://www.uscc.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed.
About U.S. Cellular
As of Sept. 30, 2007, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, employed 8,200 associates and provided wireless service to 6.1 million customers in 26 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support, and a high-quality network.
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 and projections, 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: The ability of the company to successfully manage and grow the newly launched markets; changes in competition in the markets in which the company operates; changes in the overall economy; changes due to industry consolidation; advances in telecommunications technology; changes in the telecommunications regulatory environment; changes in the value of assets; an adverse change in the ratings afforded our debt securities by accredited ratings organizations; risks and uncertainties relating to restatements and possible future restatements; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming terms and the mix of products and services offered in the company’s markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.
For more information about U.S. Cellular, visit: http://www.uscellular.com.
SOURCE United States Cellular Corporation