U.S. Cellular reported a shifting customer base moving increasingly towards the carrier’s prepaid services as well as growing impact from the sales of LTE-equipped devices.
The carrier said it lost 74,000 postpaid customers during the first quarter, compared with a loss of 38,000 for the first quarter of 2012. Over the past 12 months, U.S. Cellular has lost 201,000 postpaid subscribers and ended the first quarter with just over 5 million total postpaid customers.
Postpaid growth was impacted by a drop in gross customer additions from 210,000 subscribers last year to 191,000 gross customer additions during the first quarter of 2013, and a slight increase in customer churn from 1.6% to 1.7%. U.S. Cellular has recently announced plans to begin offering its postpaid services in 47 Sam’s Club locations across 14 states beginning May 7, and that it plans to begin offering Apple products later this year. Both plans should help the carrier moderate the loss of lucrative postpaid customers.
As evidence of that value, U.S. Cellular noted that average revenue per user from its postpaid customers increased from $54 during the first quarter of 2012 to $54.85 this year.
On the prepaid side, U.S. Cellular said it added 23,000 subscribers during the first quarter of this year, compared 4,000 net additions during the first quarter of 2012. That growth was helped by a 65% increase in gross customer additions and a dip in churn from 6.4% last year to 6.2% this year. Prepaid ARPU also increased 14 cents year-over-year to $33.31.
Overall, U.S. Cellular lost 51,000 customers during the first quarter compared with a loss of 34,000 customers in 2012. The carrier ended the latest quarter with just over 5.7 million total customers on its network.
That customer dip offset the ARPU growth, with total revenues falling 1% to $1.08 billion. A 25% year-over-year surge in equipment sales was not enough to offset a 3% drop in service revenues. Operating expenses also increased 7% year-over-year, which sent net income attributed to shareholders plummeting 92% to $4.9 million.
U.S. Cellular noted that the growing uptake of LTE-equipped devices and accompanying increase in subsidies impacted its cost structure, which it hopes to balance with a growth in ARPU and reduced spending on its legacy CDMA network.
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