Indicating an increased reliance on prepaid customers, U.S. Cellular posted fourth quarter financial results highlighting a net customer gain for its branded service on the back of its no-contract offering, though increased expenses hit its bottom line.
The regional carrier said it lost 10,000 customers across its network during the fourth quarter, which was down sequentially from the 9,000 net additions posted during the previous quarter, but a strong improvement from the 41,000 customers lost during the fourth quarter of 2011. The carrier ended 2012 with nearly 5.8 million customers on its network, down slightly from the 5.9 million at the beginning of the year.
As for its branded service, U.S. Cellular said it added 22,000 retail customers across its “core” markets during the fourth quarter of 2012, which was a significant increase compared with the 4,000 customers added in 2011. U.S. Cellular noted that its prepaid services added 38,000 net customers during the last quarter of 2012 compared with just 6,000 prepaid net additions in 2011, while its postpaid services lost 16,000 customers during the fourth quarter of 2012 compared with the loss of just 2,000 contract subscribers the previous year.
U.S. Cellular noted that postpaid churn increased year-over-year from 1.6% to 1.8%, but does not break out prepaid churn numbers.
Average revenue per user dipped slightly year-over-year from $58.13 during the fourth quarter of 2011 to $58 in 2012, despite growing smartphone usage. The carrier noted that nearly 63% of devices sold during the fourth quarter of 2012 were smartphones compared with 52.5% in 2011.
Total revenues increased 1% year-over-year for the quarter to $1.115 billion, with equipment sales offsetting a 2% drop in service revenues. However, operating expenses increased 9% year-over-year leading to a loss of $39.6 million for the quarter compared with a gain of $2.8 million in 2011.
U.S. Cellular’s stock (USM) was trading down more than 3% early Tuesday.
U.S. Cellular is on tap to gain $480 million from the pending sale of its operations in Chicago, St. Louis and a handful of markets in the Midwest to Sprint Nextel. The transaction, which is expected to close mid-2013, will include both spectrum assets in the 1.9 GHz band and approximately 585,000 customers.
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