Prepaid bolsters U.S. Cellular's results

U.S. Cellular Corp. posted delayed first quarter financial results showing that the prepaid revolution is in full effect for regional carriers.
The industry’s No. 6 largest carrier said it added 33,000 direct prepaid customers during the first quarter and lost 9,000 direct postpaid subscribers ending the quarter with a net gain of 24,000 direct customers. The carrier’s wholesale operations further dragged on results with the loss of 27,000 through its partner channels and dropping U.S. Cellular’s total customer gains to just 6,000 subscribers for the quarter.
Total customer additions were down from the 47,000 customers it added during the first quarter of 2009, while direct customer additions dropped from the 63,000 customers it added during the first three months of last year. However, over the past year the carrier’s direct postpaid net customer additions dropped from a gain of 60,000 customers in 2009 to the loss of 9,000 customers this year, while prepaid customer additions surged from 3,000 during the first quarter of 2009 to 33,000 customers this year.
This shift from postpaid growth to prepaid growth was also reported from the industry’s nationwide operators.
The loss of direct postpaid customers was tied to a decrease in gross customer additions – dropping from 366,000 customers during the first quarter of 2009 to 305,000 customers this year – as the carrier managed to report a year-over-year drop in postpaid customer churn from 1.5% in 2009 to 1.4% this year.
U.S. Cellular ended the first quarter with 6.147 million customers on its network, down from the 6.243 million at the end of the first quarter of 2009.
U.S. Cellular’s average revenue per user for the quarter was a mixed bag as overall ARPU dipped slightly to $52.42 while retail ARPU inched up to $46.99. Retail ARPU was bolstered by a 30% increase in data ARPU to $10.93 that offset a 6% drop in voice revenues.
U.S. Cellular’s total service revenues dropped nearly 2% year-over-year to $965.2 million for the first quarter.
U.S. Cellular’s management noted that the carrier was on track to provide CDMA-based 3G services to 98% of its customer base by the end of this summer and that it was continuing to develop its LTE roll out plans.
U.S. Cellular’s stock was trading down just under 1% mid-day at $41.16 per share.