United States Cellular Corporation (USM) Bundle
A Brief History of United States Cellular Corporation (UScellular)
United States Cellular Corporation (UScellular), founded in 1983, has evolved into one of the largest telecommunications providers in the United States, primarily serving rural and suburban areas. As of 2024, UScellular operates in 23 states, providing wireless voice and data services to approximately 4.9 million customers.
Financial Performance Overview
For the nine months ended September 30, 2024, UScellular reported a net loss attributable to shareholders of $44 million, compared to a net income of $40 million for the same period in 2023. The company experienced a significant non-cash charge related to the impairment of wireless spectrum licenses amounting to $136 million in 2024.
| Financial Metrics | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Net Income (Loss) | $(44) million | $40 million |
| Operating Revenues | $2,799 million | $2,906 million |
| Adjusted EBITDA | $810 million | $753 million |
| Capital Expenditures | $415 million | $462 million |
Recent Strategic Developments
In May 2024, UScellular's Board of Directors approved a Securities Purchase Agreement with T-Mobile US, Inc., to sell its wireless operations and select spectrum assets for a purchase price of $4.4 billion, which includes the assumption of approximately $2 billion in debt. This transaction is expected to close in mid-2025, pending regulatory approvals.
Operating Segments Performance
For the three months ended September 30, 2024, UScellular reported total operating revenues of $922 million, down from $963 million for the same quarter in 2023. The breakdown of revenues is as follows:
| Operating Segment | 2024 (3 Months) | 2023 (3 Months) |
|---|---|---|
| Service Revenues | $747 million | $762 million |
| Equipment Sales | $175 million | $201 million |
Cash Flow Analysis
UScellular’s cash flows from operating activities for the nine months ended September 30, 2024, amounted to $761 million, compared to $719 million in 2023. The cash used in investing activities was $415 million in 2024, primarily for property, plant, and equipment.
| Cash Flow Metrics | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Cash from Operating Activities | $761 million | $719 million |
| Cash Used in Investing Activities | $(415) million | $(464) million |
| Cash Used in Financing Activities | $(237) million | $(378) million |
Market Position and Outlook
UScellular remains focused on enhancing its market position through strategic partnerships and investments in technology. The expected completion of the T-Mobile transaction will allow UScellular to streamline operations and focus on its core business, while the divestiture of wireless operations will likely lead to increased third-party revenues under the Master License Agreement with T-Mobile.
As of September 30, 2024, UScellular's total assets were valued at $10.516 billion. The company continues to evaluate additional strategic alternatives to optimize its asset portfolio and enhance shareholder value.
A Who Owns United States Cellular Corporation (USM)
Ownership Structure
The United States Cellular Corporation (USM) is primarily owned by its parent company, Telephone and Data Systems, Inc. (TDS). As of 2024, TDS holds approximately 83.5% of the voting power, which translates to around 87% of the common shares of UScellular. The remaining shares are held by various institutional and retail investors.
Major Shareholders
As of the latest financial reports, the following table summarizes the major shareholders of UScellular:
| Shareholder | Ownership Percentage | Shares Held (in millions) |
|---|---|---|
| Telephone and Data Systems, Inc. (TDS) | 83.5% | 74.1 |
| BlackRock, Inc. | 4.2% | 3.6 |
| The Vanguard Group, Inc. | 3.9% | 3.4 |
| State Street Corporation | 2.1% | 1.8 |
| Other Institutional Investors | 6.3% | 5.5 |
Recent Transactions
In May 2024, UScellular announced a significant transaction involving the sale of its wireless operations and select spectrum assets to T-Mobile US, Inc. for a total consideration of $4.4 billion. This transaction is expected to close in mid-2025, pending regulatory approvals.
Financial Performance Overview
For the nine months ended September 30, 2024, UScellular reported the following financial metrics:
| Financial Metric | Amount (in millions) |
|---|---|
| Total Operating Revenues | $2,799 |
| Net Income (Loss) | $(37) |
| Adjusted EBITDA | $810 |
| Total Assets | $10,516 |
| Capital Expenditures | $415 |
Recent Stock Performance
As of September 30, 2024, UScellular's stock was trading at an average price of $54.94. The company purchased a total of 474,074 shares under its stock repurchase plan during the quarter.
Shareholder Equity
The consolidated statement of changes in equity for UScellular as of September 30, 2024, indicates the following:
| Equity Component | Value (in millions) |
|---|---|
| Series A Common Shares | $88 |
| Additional Paid-in Capital | $1,764 |
| Treasury Shares | $(83) |
| Retained Earnings | $2,813 |
| Total Shareholders' Equity | $4,582 |
United States Cellular Corporation (USM) Mission Statement
Overview of Mission Statement
The mission statement of United States Cellular Corporation (UScellular) emphasizes its commitment to delivering exceptional wireless services to its customers while fostering innovation and community engagement. The company aims to provide reliable connectivity, superior customer service, and advanced technology solutions tailored to meet the diverse needs of its users.
Financial Performance Indicators
As of September 30, 2024, UScellular reported key financial metrics that reflect its operational efficiency and market position:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Operating Revenues | $922 million | $963 million | -4% |
| Net Income (Loss) | $(79) million | $23 million | N/M |
| Adjusted EBITDA | $269 million | $263 million | 3% |
| Capital Expenditures | $120 million | $111 million | 8% |
| Free Cash Flow | $331 million | $237 million | 39% |
Customer Engagement and Services
UScellular's mission is underscored by its focus on enhancing customer experience through various initiatives:
- Providing competitive pricing on wireless plans and devices.
- Offering a range of customer support options, including in-store, online, and through mobile applications.
- Investing in network improvements to enhance coverage and service reliability.
Recent Strategic Developments
In May 2024, UScellular's Board of Directors approved a major transaction to sell its wireless operations and select spectrum assets to T-Mobile for approximately $4.4 billion. This strategic decision is anticipated to reshape UScellular's operational focus and financial structure going forward.
Investment in Technology
UScellular continues to invest in technological advancements to support its mission:
- Deployment of 5G technology to enhance service offerings and customer satisfaction.
- Investment in IoT solutions to cater to the growing demand for connected devices.
Community Engagement
UScellular is dedicated to supporting local communities through various initiatives:
- Partnerships with local organizations to promote digital literacy.
- Programs aimed at bridging the digital divide in underserved areas.
Key Metrics on Customer Base
As of September 30, 2024, UScellular reported the following statistics regarding its customer base:
| Customer Type | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Postpaid Connections | 3,999,000 | 4,159,000 | -4% |
| Prepaid Connections | 452,000 | 462,000 | -2% |
| Total Connections | 4,451,000 | 4,621,000 | -4% |
Challenges and Market Dynamics
UScellular faces significant challenges in a competitive landscape that includes aggressive pricing strategies from larger carriers. The company has experienced pressure on its service revenues due to:
- Decreased average postpaid and prepaid connections.
- Increased competition from both traditional and cable wireless providers.
Conclusion of Financial Overview
UScellular's mission statement reflects its commitment to providing quality services while navigating financial challenges and strategic transitions. The company is actively working to enhance its offerings and operational efficiency in response to market demands.
How United States Cellular Corporation (USM) Works
Overview of Operations
United States Cellular Corporation (USM) operates as a regional wireless service provider in the United States, offering a range of voice and data services. As of September 30, 2024, UScellular reported total operating revenues of $2.799 billion for the nine months ended, compared to $2.906 billion in the same period of 2023, reflecting a 4% decrease year-over-year.
Financial Performance
During the third quarter of 2024, UScellular's total operating revenues were $922 million, down from $963 million in the third quarter of 2023. The decline was primarily attributed to reductions in both service revenues and equipment sales, which decreased by 2% and 13% respectively.
| Financial Metric | Q3 2024 (Millions) | Q3 2023 (Millions) | Change (%) |
|---|---|---|---|
| Total Operating Revenues | $922 | $963 | -4% |
| Service Revenues | $721 | $737 | -2% |
| Equipment Sales | $175 | $201 | -13% |
| Net Income (Loss) | $(78) | $23 | N/A |
Customer Metrics
The company reported an average revenue per user (ARPU) of $52.04 for the three months ended September 30, 2024, compared to $51.11 in the prior year, marking a 2% increase. The average revenue per account (ARPA) also saw a slight rise to $131.81.
Operational Expenses
For the nine months ending September 30, 2024, UScellular's total operating expenses amounted to $2.784 billion, up from $2.770 billion in the previous year. The increase in expenses was largely driven by:
- System operations costs: $582 million in 2024 vs. $597 million in 2023.
- Selling, general and administrative expenses: $953 million compared to $995 million in the prior year.
- Depreciation, amortization, and accretion: $466 million compared to $490 million in 2023.
| Expense Category | 2024 (Millions) | 2023 (Millions) | Change (%) |
|---|---|---|---|
| System Operations | $582 | $597 | -2% |
| Selling, General and Administrative | $953 | $995 | -4% |
| Depreciation, Amortization, and Accretion | $466 | $490 | -5% |
Capital Expenditures
Capital expenditures for the first nine months of 2024 were $400 million, a decrease from $452 million in the same period of 2023. This reflects a strategic shift in investment priorities as UScellular navigates competitive pressures and operational adjustments.
Balance Sheet Overview
As of September 30, 2024, UScellular reported total assets of $10.516 billion, down from $10.750 billion as of December 31, 2023. Key components include:
- Cash and cash equivalents: $272 million
- Accounts receivable: $871 million
- Licenses: $4.576 billion
| Balance Sheet Item | September 30, 2024 (Millions) | December 31, 2023 (Millions) |
|---|---|---|
| Total Assets | $10,516 | $10,750 |
| Cash and Cash Equivalents | $272 | $150 |
| Accounts Receivable | $871 | $900 |
| Licenses | $4,576 | $4,693 |
Debt and Financing Activities
As of September 30, 2024, UScellular's long-term debt stood at $2.882 billion. The company repaid $203 million in long-term debt during the third quarter of 2024. Additionally, UScellular has a receivables securitization agreement with an outstanding borrowing capacity of $448 million as of the same date.
Market Position and Strategic Initiatives
UScellular faces ongoing competitive pressures from both traditional carriers and cable wireless companies. The company is exploring strategic alternatives, including a potential sale of its wireless operations to T-Mobile for approximately $4.4 billion. The transaction is expected to close in mid-2025, pending regulatory approvals.
How United States Cellular Corporation (USM) Makes Money
Revenue Sources
United States Cellular Corporation (USM) generates revenue primarily through two segments: Wireless Operations and Tower Operations. The company’s total operating revenues for the nine months ended September 30, 2024, were $2,799 million, representing a decrease from $2,906 million in the same period of 2023.
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | YTD 2024 (in millions) | YTD 2023 (in millions) |
|---|---|---|---|---|
| Service Revenues | $721 | $737 | $2,168 | $2,214 |
| Equipment Sales | $175 | $201 | $554 | $617 |
| Total Operating Revenues | $896 | $938 | $2,722 | $2,831 |
Wireless Operations
In the Wireless segment, UScellular primarily earns through retail service charges, which include postpaid and prepaid voice and data services. For the nine months ended September 30, 2024, retail service revenues were $2,014 million, a decrease of 2% compared to $2,065 million in 2023. The company reported a postpaid average revenue per user (ARPU) of $52.04 for Q3 2024, up from $51.11 in Q3 2023.
Equipment Sales
UScellular also generates revenue through equipment sales, which decreased to $554 million for the nine months ended September 30, 2024, down from $617 million in the same period in 2023. The company attributed this decline to lower smartphone sales and upgrades, reflecting a competitive market.
Tower Operations
UScellular’s Tower Operations segment contributes additional revenue through leasing agreements. As of September 30, 2024, UScellular owned 4,407 towers, with a tenancy rate of 1.55. For the nine months ended September 30, 2024, Tower Operations generated $175 million in revenue.
| Operational Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Owned Towers | 4,407 | 4,356 |
| Number of Colocations | 2,418 | 2,406 |
| Tenancy Rate | 1.55 | 1.55 |
Operating Expenses
Total operating expenses for the nine months ended September 30, 2024, were $2,802 million, compared to $2,789 million for the same period in 2023. Key components included:
- System Operations Expenses: $582 million, down from $597 million in 2023.
- Cost of Equipment Sold: $630 million, down from $708 million in 2023.
- Selling, General and Administrative Expenses: $953 million, down from $995 million in 2023.
- Depreciation, Amortization, and Accretion: $466 million, up from $456 million in 2023.
Income and Cash Flow
UScellular reported a net loss attributable to shareholders of $79 million for Q3 2024 compared to a profit of $23 million in Q3 2023. For the nine months ended September 30, 2024, the net loss was $44 million, down from a profit of $40 million in 2023. Cash flows from operating activities were $761 million for the nine months ended September 30, 2024, compared to $719 million in the same period of 2023.
| Financial Metrics | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income (Loss) | $(78) million | $23 million | $(37) million | $43 million |
| Cash Flows from Operating Activities | $761 million | $719 million | $761 million | $719 million |
Debt and Liquidity
As of September 30, 2024, UScellular had total assets of $10,516 million and outstanding borrowings of $2 million under its receivables securitization agreement. The company’s capital expenditures for the nine months ended September 30, 2024, were $415 million, down from $462 million in 2023.
UScellular continues to face competitive pressures in the wireless market, leading to strategic reviews and adjustments in operations to maintain profitability and market position.
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Article updated on 8 Nov 2024
Resources:
- United States Cellular Corporation (USM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of United States Cellular Corporation (USM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View United States Cellular Corporation (USM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.