The wireless industry’s No. 5 carrier U.S. Cellular Corp. added 20,000 customers during the fourth quarter of 2008, which was less than half the 44,000 subscribers the carrier managed to add the previous year, though an improvement over the 18,000 customers it lost the previous quarter. The carrier ended 2008 with nearly 6.2 million customers on its network.
Average revenue per user increased slightly year-over-year to $52.71, with total data revenues jumping nearly 32% to $142.1 million, representing 14.5% of total service revenues.
“Smartphone sales are up sharply and carry higher ARPU due to data packages. ARPU has increased year over year for 13 consecutive quarters,” said John E. Rooney, U.S. Cellular president and CEO. The carrier said it plans to launch more data-centric handsets later this year.
When asked about competing with Boost Mobile’s recently launched $50 per month unlimited plan during a conference call, Jay Ellison, executive VP and COO of U.S. Cellular, said it was not making them nervous because their business does not heavily rely on prepaid. Ellison noted that 95% of U.S. Cellular’s customer base is postpaid.
“About only 5% of our base is prepaid,” said Steven Campbell, executive VP of finance and CFO for U.S. Cellular. “We really have not seen anything major at this moment that gives us a concern.”
U.S. Cellular did say that it is in the process of putting more emphasis on its prepaid offerings. However, the outsourced prepaid billing system that U.S. Cellular employs is going out of business.
“We have to migrate off of that platform and onto another one, and that’s what’s going on in the first half of this year,” Ellison said. “We have a product line that isn’t quite as robust as we’d like to make it So once we get that transition done, then I expect that it will be a little bit more active in that segment.”
Total revenues grew nearly 3% from $1.024 billion during the fourth quarter of 2007 to $1.053 billion last year. The growth was spread evenly between service and equipment revenues. However a $386.7 million loss on “impairment of intangible assets” during the quarter pushed the carrier’s net income down from a return of $29.2 million in 2007 to a loss of $200.1 million last year. U.S. Cellular attributed the non-cash charge to “further deterioration in the credit and financial markets and the accelerated decline in the overall economy in the fourth quarter of 2008.”
“For 2009, we intend to not only retain and grow our customer base, but also invest in the company on a number of fronts, so that we emerge from the economic downturn stronger than ever. In addition to the continued overlay of EV-DO, we are pursuing a number of multi-year initiatives to make this happen,” added Rooney.
U.S. Cellular is on track to continue increased data use by expanding its mobile broadband network. The carrier said CDMA2000 1x EV-DO Revision A capabilities were available on 23% of its 6,877 cell sites at the end of 2008, and that it plans to cover more than 60% of cell sites by the end of this year.
Article updated Feb. 27 to include additional formation from U.S. Cellular’s conference call.
