Markets

Here's Why You Should Hold on United States Cellular (USM)

Market charts plus calculator

On Jun 12, 2017, we issued an updated research report on United States Cellular Corp.USM . The company, with a Zacks Rank #3 (Hold), is the wireless subsidiary of Telephone & Data Systems Inc. TDS . You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The price performance of U.S. Cellular has been encouraging over the past three months. Share price of U.S. Cellular inched up 10.74% compared with the Zacks-categorized Wireless National industry's decline of 5.50%.

U.S. Cellular's top priority has always been subscriber addition and churn management. Toward this end, the company has taken up different calculative and judicious business moves such as the introduction of a new billing system, continuous rollout of 4G LTE, enhancement of LTE handsets, completion of various spectrum transactions and monetization of non-strategic assets.

Moreover, Shared Connect plans which offer more data, larger allotments and unlimited offerings bode well. The company's decision to upgrade its existing prepaid plans by increasing the amount of data available, should help witness more prepaid subscriber addition. Despite such lucrative changes, the company lost 4,000 prepaid customers in the last reported first-quarter 2017. As of Mar 2017, prepaid subscriber base totaled 480,000, compared with 484,000 at the end of 2016.

U.S. Cellular is also optimistic about its collaboration with Ericsson ERIC for 5G network trials, followed by the growing demand for smartphones which enjoy significant market penetration while supporting growth in data revenues. The company is also focused on various cost-cutting initiatives

On the flip side, U.S. Cellular operates in an intensely competitive wireless market and faces challenges from the lower-cost mobile service plan offerings of competitors. On a regional level, the company competes with AT&T Inc. T -owned Leap Wireless.

Additionally, high costs associated with network integration and construction of cell sites, aggressive pricing by larger rivals and the ongoing consolidation in the wireless industry through mergers, acquisitions and joint ventures are other risks.

The company's cash and liquidity scenario was also stressful. We wait to see if it recovers in the upcoming quarter results.

Latest Updates on U.S. Cellular

On Jun 8, 2017, U.S. Cellular announced plans to sel the latest 10.5-inch iPad Pro and new 12.9-inch iPad Pro.

In Mar 2017, U.S. Cellular submitted an application to the Federal Communications Commission (FCC) for a six-month special temporary authority (STA) to conduct trial runs in the 3.5 GHz band in some areas of Maine and North Carolina.

The company also took an initiative to draw customers for its unlimited prepaid plans by announcing unlimited high-speed data on its Simple Connect and Ready Connect Prepaid offerings for only $70 a month. The company has also decided to upgrade its existing data plans with the addition of more data.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Ericsson (ERIC): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

Telephone and Data Systems, Inc. (TDS): Free Stock Analysis Report

United States Cellular Corporation (USM): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ERIC TDS T USM

Other Topics

Stocks

Latest Markets Videos