Fueled by United States Cellular Corp.’s strong financial results, parent company Telephone and Data Systems Inc. increased revenues and operating cash flow by 17 percent and 28 percent, respectively, in the third quarter.
U.S. Cellular said service revenues, compared with the same period last year, increased 18 percent to $360.1 million. Operating cash flow increased 34 percent to $153 million, representing 42 percent of service revenues.
Net income increased 52 percent from the third quarter 1998 to $53.9 million, or 59 cents per share on a diluted basis. Customer activations numbered 74,000, bringing U.S. Cellular’s total subscriber base to 2.5 million.
“The net adds were below target,” said Ken Meyers, executive vice president of finance with U.S. Cellular. “We felt the effects of three different tropical storms in Texas and the East Coast. Our retail locations were closed for weeks from Hurricane Floyd …
“We saw promotional offerings from entrants that we chose not to immediately respond to. That attributed to lower sales and churn.”
Meyers said the carrier still expects to meet its target subscriber additions for the year of 410,000.
Roaming revenue accounted for about 25 percent of U.S. Cellular’s total revenues, with about 14 percent of total roaming coming from personal communications services operators.
“Clearly we are seeing the effect of vibrant growth across all segments and a growing contribution of minutes from our roaming partners in the PCS arena as well as the cellular arena,” said Meyers. “We continue to bring the price down and still capture substantial year-over-year growth in minutes.”
TDS’s PCS business, Aerial Communications Inc., added about 16,000 customers during the third quarter, ending the quarter with 363,000 customers. Service revenues totaled $49.1 million, while operating cash flow was a negative $26.2 million compared with a negative $40.5 million in the third quarter 1998.
Pending shareholder and regulatory approvals, Aerial said its merger with VoiceStream Wireless Corp. should be completed in the first quarter.
TDS’s board of directors in September approved a plan to exchange its shares in Aerial for VoiceStream stock, in conjunction with the merger of the two PCS operators. TDS said it expects to recognize a net gain on the ultimate disposition of Aerial and has deferred recognition of Aerial’s net operating losses of $5.6 million from Sept. 18 to Sept. 30. Beginning this quarter, TDS will report Aerial’s operating results as discontinued operations.
TDS’s operating revenues for the third quarter were $510.6 million. Earnings per share from continuing operations, excluding gains, were 82 cents compared with diluted earnings per share of 38 cents in the third quarter 1998.
