U.S. Cellular Q1: revenues rise, customers churn

Regional wireless operator U.S. Cellular experienced mixed results during the first quarter as a recent billing system change tripped up customer retention, though average customer spending surged.
U.S. Cellular said it lost 80,000 direct retail customers during the first quarter of the year, significantly more than the 51,000 customers the carrier lost during the same period in 2013. This year’s losses included 93,000 contract customers that was offset slightly by a net gain of 13,000 prepaid subscribers.
The losses continued U.S. Cellular’s continued drop in its customer base, which has fallen from more than 5.7 million customers one year ago to less than 4.7 million customers at the end of the first quarter this year – though a big chunk of that drop came from the sale of wireless assets and markets.
On the postpaid side, increased customer churn offset gains in gross customer additions, with churn jumping from 1.7% last year to 2.3% this year. Prepaid results also saw an increase in churn from 6.2% to 6.9% that was also accompanied by a dip in gross customer additions. U.S. Cellular noted that a recent billing systems change continued to hamper its ability to stabilize churn results, though it expects improvements through the rest of the year.
“We’ve made significant progress to return service levels to our normally high standards following the billing system conversion,” explained Kenneth Meyers, president and CEO of U.S. Cellular. “While churn is still elevated, we are currently seeing improvements in both voluntary and involuntary churn from peak levels back in 2013 and early 2014.”
Myers was tapped to run U.S. Cellular in mid-2013 following the abrupt resignation of previous CEO Mary Dillon. Myers previously served as EVP and CFO of U.S. Cellular parent company Telephone and Data Systems, and has previous stints at both operations dating back to 1987.
The diminished customer base also impacted overall revenues, which dropped 14% year-over-year to $925.8 million for the first quarter. However, U.S. Cellular was able to extract more revenue per user with ARPU increasing $3.05 to $60.19. Helping to push ARPU was the continued adoption of smartphones, with the carrier reporting 73% of devices sold during the latest quarter were tied to higher-priced rate plans.
U.S. Cellular was also able to trim expenses, which helped bolster net income from $4.9 million last year to nearly $19.5 million this year. Helping to curb expenses was a decrease in capital expenditures from $107.9 million during the first quarter of last year to $89.6 million during the first quarter of this year.
Bored? Why not follow me on Twitter?