United States Cellular Corp.
), a subsidiary of
Telephone and Data Systems Inc
), has reported second quarter 2012 earnings per share of 62 cents,
below the Zacks Consensus Estimate of 69 cents and the year-ago
earnings of 88 cents.
Net income attributable to shareholders also decreased 29.7%
year over year to $52.7 million in the reported quarter.
Second quarter revenues of $1,104.4 million were above the Zacks
Consensus Estimate of $1,094 million and also grew 2.6% from
$1,076.2 million in the year-ago quarter driven by data revenues
and smartphone sales.
Revenue, ARPU & Churn
revenue upped 3% year over year to $1,029.7 million. Revenues
sales inched up approximately 1% year over year to $74.7
million. Smartphone sales remained strong and represented
approximately 51.9% of all sold devices versus 39.6% in the
The reported quarter's retail service ARPU (average revenue per
user) was $50.99 compared with $48.28 in the year-ago quarter.
Post-paid churn deteriorated to 1.6% from 1.4% in the year-ago
quarter due to competitive pricing.
U.S. Cellular marked a net subscriber loss of 28,000 retail
customers compared with 58,000 net loss in the year-ago quarter.
Total subscriber base went down to 5,799,000 from 5,968,000 in the
year-ago period. The company exited the quarter with a retail
customer base of 5,542,000 compared with 5,644,000 in year-ago
quarter. The company added 238,000 customers in its Belief plan in
the second quarter.
U.S. Cellular generated $412 million in cash flow from operating
activities in the second quarter compared with $438 million in
the year-ago quarter. Capital expenditures were $183.2 million as
against $162.1 million in the comparable prior-year period. The
company reported free cash flow of a negative $65.7 million versus
a positive $36.0 million in the year-ago quarter. The company's
debt-to-equity ratio was 23.1% compared with 23.9% at year-end
For fiscal 2012, U.S. Cellular maintained all its previously
projected estimates. The company expects revenue in the range of
$4,050-$4,150 million and operating income in the range of
$200-$300 million. Adjusted OIBDA is estimated in the range of
$800-$900 million. Capital expenditure is expected to be
approximately $850 million.
U.S. Cellular managed to benefit from the growing demand for
smartphones that is driving growth in data services and post-paid
customer addition. Additionally, the company's increased
investments in advanced network technology deployment along with
its foray into Long-Term Evolution (LTE) services will also bode
well despite several integration problems, intense competition from
MetroPCS Communications, Inc.
), pricing, regulatory pressures and economic uncertainty.
We recommend a long-term Outperfrom rating on U.S. Cellular
supported by a Zacks #2 Rank (Buy).
METROPCS COMMUN (PCS): Free Stock Analysis
TELEPHONE &DATA (TDS): Free Stock Analysis
US CELLULAR (USM): Free Stock Analysis Report
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