U.S. Cellular posted improved churn that offset lower gross additions
U.S. Cellular continued to show its ability to grow its customers despite an increasingly competitive environment, results boosted by lower churn.
The regional carrier said it added 21,000 net customers during the first quarter of the year, which was a strong turnaround from the 80,000 customers it lost during the same quarter of 2014. The latest results included 9,000 postpaid net additions and 13,000 prepaid net additions, with the carrier ending the quarter with 4.775 million customers on its network.
Growth was boosted by a sharp drop in customer churn, falling year-over-year from 2.3% to 1.5% on the postpaid side and from 6.9% to 5.8% on the prepaid side. Those results offset what were lower gross customer additions, highlighting the competitive pressures in the market and the growing need for regional carriers to improve their customer retention efforts.
Competition also impacted consumer spending, as average revenue per user dropped $1.64 year-over-year to $52.29, with overall service revenue ARPU – including inbound roaming – falling $2.18 to $58.01.
A larger overall customer base help offset the dip in ARPU, with total operating revenue increasing 4% to $965.2 million. Combined with a strong drop in operating expenses, U.S. Cellular posted $160 million in net income for the quarter, compared to the $19.4 million reported last year. That dip in expenses included quarterly capital expenses, which dropped from $89.5 million during Q1 2014 to $66.5 million this year.
Looking ahead, U.S. Cellular boosted its previously forecast full-year operating cash flow by $50 million to between $400 million and $500 million, with adjusted earnings before interest, taxes, depreciation and amortization increased by a similar $50 million to between $580 million and $680 million. The carrier left unchanged previous forecasts of $600 million in full-year capex and between $4 billion and $4.2 billion in operating revenues.
U.S. Cellular had previously announced plans to add more than 600 LTE cell sites this year as it looks to expand coverage to 98% of its customer base across 10 states. The expansion is set to include 2,000 towns in areas of California, Maine, Maryland, New Hampshire, North Carolina, Oregon, Vermont, Virginia, Washington and West Virginia. Much of that will include work with King Street Wireless, which controls the 700 MHz A-Block spectrum assets U.S. Cellular uses to power some of its LTE network.
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