U.S. Cellular reports better earnings, fewer customers

U.S. Cellular Corp. (USM) reported better earnings on basically flat revenue for the third quarter, and while average revenue per user increased, the carrier continued to lose customers. Total subscriber count dropped by 41,000 from June through September.
The operator introduced service plans called “The Belief Project,” Oct. 1 to help stem those losses. The Belief Project allows existing customers to upgrade subsidized handsets without signing new two-year contracts and also has a loyalty rewards component.
“Our third-quarter results reflect a strong increase in data revenues driven by higher levels of smart-phone penetration. We also experienced renewed growth in roaming revenues and maintained our focus on cost control,” said Mary N. Dillon, U.S. Cellular president and CEO.
“Since the (Oct. 1) launch, we’ve seen higher-than-expected levels of customer migration to the new, bundled Belief Plans, and we’re confident that as customers experience all the benefits that are built into these plans, they will not only stay with us longer, but choose higher-value plans with additional features. As we build awareness in the wireless marketplace, we expect to see more customers switch from other carriers that don’t offer the same level of value, rewards and overall customer satisfaction. And, in conjunction with the launch of the Belief Project, we upgraded our web site to make it easier for new and existing customers to select the best plans and products for them and manage their accounts online, which should stimulate sales and reduce selling costs over time.”
U.S. Cellular added 338,000 gross new subscribers in the quarter, down 11,000 from the previous quarter and down 48,000 year over year. While U.S. Cellular only dropped 3,000 net additions in the second quarter, and 24,000 in Q3 2009, the carrier lost 41,000 this quarter, bringing total subscribers to 6.1 million.
The operator experienced good news on the data front, as data revenues increased 31% to $228.9 million, which is 23% of service revenues, up 5 percentage points from 2009. Retail service ARPU increased to $47.12 from $46.97.