Data revenues increase 28 percent; postpay churn reduced to 1.4 percent.
Note: Comparisons are year over year unless otherwise noted.
1Q 2010 Highlights
* 24,000 retail net additions, reflecting a gain of 33,000 prepaid customers and a loss of 9,000 postpay customers.
* Service revenues of $965.2 million decreased 2 percent due to reductions in voice and inbound roaming revenues, offset by higher data revenues.
* 28 percent increase in data revenues to $201.3 million, representing 21 percent of total service revenues.
* Retail service ARPU (average revenue per unit) increased to $46.99 from $46.87.
* Retail postpay churn of 1.4 percent; postpay customers comprised 95 percent of retail customers.
* 5 percent increase in cell sites in service to 7,310.
* Repurchased 127,500 common shares for $5.2 million.
As previously announced, U.S. Cellular will hold a teleconference on May 10, 2010, at 9:30 am CDT. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com or uscellular.com.
United States Cellular Corporation (NYSE: USM) reported service revenues of $965.2 million for the first quarter of 2010, a 2 percent decrease from $983.6 million in the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $48.2 million and $0.55, respectively, for the first quarter of 2010, compared to $84.5 million and $0.97, respectively, in the comparable period one year ago.
"U.S. Cellular's commitment to providing excellent communications experiences including superior data services delivered results in important areas," said John E. Rooney, U.S. Cellular president and CEO. "Data revenues grew 28 percent due to the continuing rapid adoption of smartphones and premium phones, and the increased data use related to these phones, as well as to overall increases in text and picture messaging. The growth in data revenues partially offset the effect of lower voice revenues and inbound roaming revenues.
"We also achieved a reduction in churn, as customers responded well to our high-quality services and wide range of feature-rich handsets, and to our Battery Swap and Overage Protection programs, demonstrating that we understand our customers' needs and exceed their expectations.
"As we expand 3G availability and add to our portfolio of smartphones, including two new Android phones—one from HTC and an exclusive from Samsung, we expect data revenues to continue to grow and to comprise an ever larger share of service revenues.
"Though postpay customers remain our primary focus, we are executing on growth opportunities in the prepaid segment. The improved prepaid additions this quarter are proof that we provide outstanding communications experiences for all of our customers. To build on this success, we significantly enhanced our prepaid offerings at the end of the quarter by adding new data services such as picture messaging, applications such as ring tones and games, e-mail and web services.
"Also, as part of our major enablement initiatives, we upgraded our campaign management system to facilitate more targeted and effective direct mail campaigns. Though profitability for the quarter was impacted by planned expenditures related to these initiatives, we expect that the initiatives will ultimately reduce operational expenses and support our customer-focused strategy over the long term."
Guidance
Guidance for the year ending Dec. 31, 2010 as of May 10, 2010 is as follows. Guidance is unchanged from Feb. 25, 2010 except that the company has commenced guidance on adjusted OIBDA. There can be no assurance that final results will not differ materially from this guidance.
Service revenues
$3,975-$4,075 million
Adjusted OIBDA(1)
$850-$950 million
Operating income
$250-$350 million
Depreciation, amortization and accretion(2)
Approx. $600 million
Capital expenditures
Approx. $600 million
(1) Defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals (if any); and the loss on impairment of intangible assets (if any). This amount may also be commonly referred to by management as operating cash flow. This amount should not be confused with cash flows from operating activities, which is a component of the consolidated statement of cash flows.
(2) Includes estimated losses on disposals of assets but does not include an estimate for loss on impairment of intangible assets since this cannot be predicted.
The foregoing guidance represents the views of management as of May 10, 2010 and should not be assumed to be accurate as of any other date. U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events or otherwise.
Conference call information
U.S. Cellular will hold a conference call on May 10, 2010 at 9:30 a.m. CDT.
* Access the live call on the Conference Calls page of uscellular.com at http://ir.teldta.com/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=3055234.
* Access the call by phone at 866-871-4351(US/Canada) and use conference ID 72053512.
Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of uscellular.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of uscellular.com.
About U.S. Cellular
United States Cellular Corporation, the nation's sixth-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed approximately 8,900 full-time equivalent associates as of March 31, 2010. At the end of the quarter, Telephone and Data Systems, Inc. owned 82 percent of U.S. Cellular.
Visit uscellular.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
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: The ability of the company to successfully manage and grow its markets; the economy; competition; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded our debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by the company; and the ability to obtain or maintain roaming arrangements with other carriers. 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.
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