Regional wireless operator U.S. Cellular Corp. (USM) posted second quarter results that showed continued strain for smaller players in the segment.
The carrier said it lost 70,000 customers from its network during the quarter, which was significantly greater than the 3,000 customers lost during the second quarter of 2010. U.S. Cellular noted that the most recent losses included 41,000 direct postpaid customers and 17,000 direct prepaid subscribers. The losses were attributed to decreased gross customer additions, which fell from 349,000 subscribers in 2010 to just 257,000 customers this year.
That drop in gross customer additions more than offset flat postpaid customer churn, which remained steady at 1.4%. Over the past 12 months U.S. Cellular has lost 181,000 customers from its network, all associated with sequential drops in gross customer additions, ending the quarter with 5.644 million customers on its network. U.S. Cellular is currently the No. 8 facilities-based operator in the country.
While customer growth stumbled, average revenue per user continued to climb. Total ARPU, including inbound roaming that is not charged to its customers, increased from $52.71 during the second quarter of 2010 to $55.69 this year, while billable APRU increased from $46.81 to $48.27 over the same time frame.
The recurring revenue growth helped push U.S. Cellular’s total revenues up just over 3% from $972.6 million during the second quarter of 2010 to $1.002 billion this year.
U.S. Cellular also managed to cap operating expense growth to just 1% year-over-year, which helped propel net income 81% from $33.1 million in 2010 to $73.9 million this year. The carrier added that smartphones accounted for 39.6% of new device sales during the quarter, an increase from the 15.8% posted last year.
Capital expenditures for the quarter increased from $133.5 million in 2010 to $162.1 million this year, with plans to spend up to $800 million in total on capex for the year. U.S. Cellular said it had 7,770 cell sites in service at the end of the second quarter, of which 4,400 are carrier owned.
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