U.S. Cellular Corp. reported solid operational and fiscal growth during the recently completed second quarter compared with the same three months of 2002, though analysts raised concerns over the carrier’s second downward revision this year of certain financial expectations.
During the quarter, U.S. Cellular said it added 103,000 net customer additions, a 140-percent increase compared with the 43,000 subscribers the carrier added during the second quarter of 2002, which was accomplished without the carrier’s recently acquired Chicago market and ahead of analysts expectations of approximately 80,000 net customer additions.
A drop in the carrier’s postpaid customer churn from 1.8 percent last year to 1.5 percent this year contributed to the strong customer growth and was below expectations of approximately 2-percent customer churn. U.S. Cellular also reported a slight drop in average revenue per user from $47.48 during the second quarter of 2002 to $47.38 this year and in the cost per gross addition from $391 last year to $378 this year.
Financially, U.S. Cellular reported $639.8 million in operating revenue during the second quarter of this year, which was a 22-percent increase compared with the $524.3 million the regional carrier reported during the second quarter of 2002. Net income also increased from a loss of $88.4 million last year, a loss of $1.03 per share, to a profit of $29.1 million this year, a return of 34 cents per share.
U.S. Cellular added that it expects earnings before interest, taxes, depreciation and amortization of between $615 million and $640 million this year, which is a $55 million reduction from its previously downgraded guidance, though the carrier increased its customer growth forecasts upward by 25,000 subscribers for the year and tacked another $45 million onto its expected capital expenditure budget.
