Regional mobile operator U.S. Cellular turned around several quarters of customer losses, but continued to feel financial pressure during the third quarter.
The carrier said it added 50,000 net customers during Q3, reversing a long-standing trend of customer losses, including the loss of 71,000 subscribers during Q3 last year. The most recent growth was on the back of U.S. Cellular’s postpaid services, which attracted 52,000 net customers, offsetting the loss of 2,000 customers from its prepaid offering.
U.S. Cellular ended the quarter with just under 4.7 million customers, which was down about 200,000 subscribers year-over-year.
U.S. Cellular’s management noted that customer growth was a main objective and expects the trend to continue through the end of the year.
“Our top strategic priority this year is to grow our customer base,” explained Kenneth Meyers, president and CEO of U.S. Cellular. “We have made significant progress toward that objective. … Our device and data pricing and promotions are resonating with new and existing customers. … As we move into the holiday sales season, I’m confident that we will continue to attract wireless consumers with our strong value proposition that offers a high-quality network experience, competitive devices, plans, and pricing, and excellent customer service with a local focus.”
Robust postpaid gross additions along with improved customer churn helped boost subscriber net additions, with postpaid churn dipping from 1.7% last year to 1.6% this year, while prepaid churn dropped from 6.8% last year to 6.3% this year.
Average revenue per user also showed dramatic year-over-year improvements, with postpaid ARPU surging $1.73 to $56.37 and prepaid ARPU up $5.68 to $34.40. Blended ARPU was up $2.32 year-over-year, while service revenue ARPU was up $2.56 to $60.92.
However, the ARPU growth was not enough to counteract the smaller customer base as total service revenues were down 1% year-over-year to $851.1 million. But strong equipment sales pushed total operating revenue up 7% to just over $1 billion for the quarter.
That overall growth was met by a 7% increase in operating expenses, which nearly doubled net losses attributed to shareholders from $12.3 million last year to $22.2 million this year.
The increased operating expenses were reported despite a dip in capital expenditures, which were down about $100 million year-over-year to around $142.5 million for the latest quarter. U.S. Cellular did add 56 new cell sites to its network during Q3, including 30 that it owned and 26 through tower owners.
U.S. Cellular’s stock (USM) was trading up slightly early Friday at around $36 per share.
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