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U.S. Cellular(USM) - 2025 Q2 - Quarterly Results
U.S. CellularU.S. Cellular(US:USM)2025-08-11 11:34

Company Overview and Q2 2025 Highlights Company Name Change and Earnings Announcement Array Digital Infrastructure, Inc. (formerly United States Cellular Corporation) announced its Q2 2025 results, reporting a slight year-over-year decrease in total operating revenues but significant growth in net income and diluted earnings per share attributable to Array shareholders - United States Cellular Corporation was renamed Array Digital Infrastructure, Inc. on August 1, 20251 Q2 2025 Consolidated Financial Highlights (Year-over-Year) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------- | :-------- | :-------- | :--------- | | Total Operating Revenues | $916M | $927M | (1)% | | Service Revenues | $736M | $743M | (1)% | | Net Income Attributable to Array Shareholders | $31M | $17M | 82% | | Diluted Earnings Per Share | $0.36 | $0.20 | 80% | Recent Highlights and Strategic Initiatives Array completed its T-Mobile transaction, declared a special dividend, and is transitioning to a tower-centric business, with pending spectrum deals with Verizon and AT&T anticipated in H2 2025 and Q3 2026 - Array completed the sale of its wireless business and certain spectrum assets to T-Mobile on August 1, 2025, for a total consideration of $4.3 billion (including cash and assumed debt)5 - A special dividend of $23.00 per share was declared, payable on August 19, 20255 - Third-party tower revenues increased by 12% year-over-year9 - Pending spectrum transactions with AT&T and Verizon are expected to close in H2 2025 and Q3 2026, respectively9 About Array and Business Description Array Digital Infrastructure, Inc. is a leading US owner and operator of shared wireless communication infrastructure, managing over 4,400 cellular towers to support 5G and other wireless technologies, with Telephone and Data Systems, Inc. holding approximately 82% equity as of August 1, 2025 - Array is a leading US owner and operator of shared wireless communication infrastructure11 - The company owns over 4,400 cellular towers, supporting 5G and other wireless technology deployments11 - As of August 1, 2025, Telephone and Data Systems, Inc. holds approximately 82% of Array's equity11 Safe Harbor Statement This report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations, including operational changes, strategic decisions for the tower business, tenant dependency, extreme weather, spectrum sale completion, and industry competition - Forward-looking statements are subject to risks and uncertainties, including Array's remaining business operations, strategic decisions for the tower business, revenue dependency on a few tenants, extreme weather events, completion of spectrum license sales to Verizon and AT&T, and competition in the tower industry12 Summary Operating Data Retail Connections and ARPU/ARPA In Q2 2025, Array experienced a quarter-over-quarter and year-over-year decline in postpaid and prepaid connections, while postpaid ARPU slightly decreased QoQ but increased YoY, and prepaid ARPU increased QoQ but decreased YoY Retail Connections (Quarter-over-Quarter and Year-over-Year) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :-------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Postpaid Total | 3,904,000 | 3,946,000 | 4,027,000 | (42,000) | (123,000) | | Postpaid Net Additions (Losses) | (42,000) | (39,000) | (24,000) | (3,000) | (18,000) | | Prepaid Total | 429,000 | 431,000 | 439,000 | (2,000) | (10,000) | | Prepaid Net Additions (Losses) | (2,000) | (17,000) | 3,000 | 15,000 | (5,000) | Average Revenue Per User (ARPU) and Average Revenue Per Account (ARPA) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :-------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Postpaid ARPU | $51.91 | $52.06 | $51.45 | ($0.15) | $0.46 | | Postpaid ARPA | $131.89 | $132.25 | $130.41 | ($0.36) | $1.48 | | Prepaid ARPU | $31.72 | $30.76 | $32.37 | $0.96 | ($0.65) | Churn Rates Postpaid churn rates increased both quarter-over-quarter and year-over-year, primarily driven by handset churn, while prepaid churn rates significantly decreased QoQ but remained largely flat YoY Churn Rates (Quarter-over-Quarter and Year-over-Year) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change (bps) | YoY Change (bps) | | :-------------------- | :-------- | :-------- | :-------- | :--------------- | :--------------- | | Postpaid Churn Rate | 1.29% | 1.21% | 1.16% | 8 | 13 | | Postpaid Handsets Churn | 1.12% | 1.03% | 0.97% | 9 | 15 | | Postpaid Connected Devices Churn | 2.36% | 2.40% | 2.47% | (4) | (11) | | Prepaid Churn Rate | 3.58% | 4.17% | 3.60% | (59) | (2) | Infrastructure and Capital Expenditures Array's owned towers and colocations continued to grow, with a slight improvement in tower tenancy rate, while Q2 2025 capital expenditures significantly decreased year-over-year, reflecting a shift in strategic focus Infrastructure and Tenancy Metrics | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :-------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Total Cell Sites in Service | 7,061 | 7,009 | 6,990 | 52 | 71 | | Owned Towers | 4,418 | 4,413 | 4,388 | 5 | 30 | | Number of Colocations | 2,527 | 2,469 | 2,392 | 58 | 135 | | Tower Tenancy Rate | 1.57 | 1.56 | 1.55 | 0.01 | 0.02 | Capital Expenditures (in millions) | Period | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :----- | :-------- | :-------- | :-------- | :--------- | :--------- | | Q2 | $80 | $53 | $165 | $27 | ($85) | Consolidated Financial Statements Consolidated Statement of Operations Total operating revenues slightly decreased year-over-year in Q2 2025, mainly due to reduced equipment sales, yet net income attributable to Array shareholders surged by 80% to $31 million, and diluted EPS grew by 81% to $0.36, primarily driven by a substantial reduction in income tax expense Consolidated Statement of Operations Highlights (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | | Total Operating Revenues | $916 | $927 | (1)% | | Service Revenues | $736 | $743 | (1)% | | Equipment Sales | $180 | $184 | (2)% | | Total Operating Expenses | $881 | $891 | (1)% | | Operating Income | $35 | $36 | (4)% | | Income Before Income Taxes | $36 | $32 | 13% | | Income Tax Expense | $4 | $14 | (73)% | | Net Income Attributable to Array Shareholders | $31 | $17 | 80% | | Diluted EPS Attributable to Array Shareholders | $0.36 | $0.20 | 81% | Consolidated Statement of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities slightly decreased to $485 million, net cash used in investing activities significantly reduced to $150 million due to lower capital expenditures, and net cash used in financing activities also decreased to $93 million, resulting in a substantial increase in cash, cash equivalents, and restricted cash to $401 million at period-end Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Metric (in millions) | 2025 | 2024 | YoY Change | | :------------------------------------ | :--- | :--- | :--------- | | Net Cash Provided by Operating Activities | $485 | $516 | ($31) | | Net Cash Used in Investing Activities | ($150) | ($284) | $134 | | Net Cash Used in Financing Activities | ($93) | ($196) | $103 | | Net Increase in Cash, Cash Equivalents and Restricted Cash | $242 | $36 | $206 | | Cash, Cash Equivalents and Restricted Cash, End of Period | $401 | $215 | $186 | Consolidated Balance Sheet As of June 30, 2025, total assets slightly decreased to $10,377 million from December 31, 2024, with a significant increase in cash and cash equivalents offset by reductions in accounts receivable and inventory, while total liabilities also decreased, mainly due to lower current liabilities, and total equity attributable to Array shareholders increased to $4,600 million Consolidated Balance Sheet Highlights (June 30, 2025 vs December 31, 2024) | Metric (in millions) | June 30, 2025 | Dec 31, 2024 | Change | | :------------------------------------ | :------------ | :----------- | :----- | | Assets: | | | | | Cash and Cash Equivalents | $386 | $144 | $242 | | Total Current Assets | $1,509 | $1,345 | $164 | | Licenses | $4,583 | $4,579 | $4 | | Property, Plant and Equipment, net | $2,313 | $2,502 | ($189) | | Total Assets | $10,377 | $10,449 | ($72) | | Liabilities & Equity: | | | | | Total Current Liabilities | $808 | $884 | ($76) | | Long-Term Debt, net | $2,819 | $2,837 | ($18) | | Total Array Shareholders' Equity | $4,600 | $4,577 | $23 | | Total Liabilities and Equity | $10,377 | $10,449 | ($72) | Segment Results Overall Segment Performance In Q2 2025, Array's total operating revenues decreased by 1% year-over-year, primarily due to a decline in wireless segment revenue offset by a 7% growth in tower segment revenue, leading to a 4% decrease in consolidated operating income, with wireless operating income declining and tower operating income rising Consolidated Segment Operating Performance (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | | Operating Revenues: | | | | | Wireless | $888 | $902 | (1)% | | Towers | $62 | $58 | 7% | | Total Operating Revenues | $916 | $927 | (1)% | | Operating Income: | | | | | Wireless | $14 | $17 | (21)% | | Towers | $21 | $19 | 11% | | Total Operating Income | $35 | $36 | (4)% | | Adjusted OIBDA (Non-GAAP): | | | | | Consolidated | $208 | $227 | (9)% | | Adjusted EBITDA (Non-GAAP): | | | | | Consolidated | $254 | $268 | (6)% | Array Wireless Segment Performance The wireless segment's total operating revenues decreased by 1% year-over-year in Q2 2025, driven by lower retail service revenues and equipment sales, with operating income declining by 21% and capital expenditures significantly reduced by 52% Array Wireless Segment Financial Data (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | | Retail Service Revenues | $652 | $666 | (2)% | | Equipment Sales | $180 | $184 | (2)% | | Total Operating Revenues | $888 | $902 | (1)% | | Total Operating Expenses | $874 | $885 | (1)% | | Operating Income | $14 | $17 | (21)% | | Adjusted OIBDA (Non-GAAP) | $174 | $196 | (11)% | | Capital Expenditures | $77 | $160 | (52)% | Array Towers Segment Performance The tower segment demonstrated strong performance in Q2 2025, with total tower revenues growing by 7% year-over-year to $62 million, including a 12% increase in third-party revenues, while operating income rose by 11% to $21 million, Adjusted OIBDA increased by 9%, and capital expenditures decreased by 51% Array Towers Segment Financial Data (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | | Third-Party Revenues | $28 | $25 | 12% | | Intra-Company Revenues | $34 | $33 | 3% | | Total Tower Revenues | $62 | $58 | 7% | | Total Operating Expenses | $41 | $39 | 5% | | Operating Income | $21 | $19 | 11% | | Adjusted OIBDA (Non-GAAP) | $34 | $31 | 9% | | Capital Expenditures | $3 | $5 | (51)% | Non-GAAP Financial Measures Free Cash Flow Array's Free Cash Flow (Non-GAAP) significantly increased to $239 million in Q2 2025, up from $165 million in Q2 2024, primarily due to reduced additions to property, plant, and equipment, with a substantial increase also observed for the six months ended June 30, 2025 Free Cash Flow (Non-GAAP) (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | | Cash flows from operating activities (GAAP) | $325 | $313 | $12 | | Cash paid for additions to property, plant and equipment | ($75) | ($137) | $62 | | Cash paid for software license agreements | ($11) | ($11) | $0 | | Free Cash Flow (Non-GAAP) | $239 | $165 | $74 | - Free Cash Flow is a non-GAAP financial measure used to assess liquidity, representing net cash generated from operations after deducting cash paid for additions to property, plant, and equipment and software license agreements29 EBITDA, Adjusted EBITDA, and Adjusted OIBDA Reconciliations Array provides reconciliations for non-GAAP metrics such as EBITDA, Adjusted EBITDA, and Adjusted OIBDA, which management uses to assess profitability and operational performance by excluding significant non-cash expenses, non-recurring items, and investing activities - EBITDA, Adjusted EBITDA, and Adjusted OIBDA are non-GAAP financial measures used by management as indicators of profitability, providing additional relevant and useful information for evaluating operating efficiency and potential business trends by excluding significant non-cash expenses, non-recurring charges, gains or losses, and other items30 Consolidated EBITDA, Adjusted EBITDA, and Adjusted OIBDA (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | | Net Income (GAAP) | $32 | $18 | $14 | | Income Before Income Taxes (GAAP) | $36 | $32 | $4 | | EBITDA (Non-GAAP) | $244 | $242 | $2 | | Adjusted EBITDA (Non-GAAP) | $254 | $268 | ($14) | | Adjusted OIBDA (Non-GAAP) | $208 | $227 | ($19) | Segment Adjusted EBITDA and Adjusted OIBDA (Q2 2025 vs Q2 2024) | Segment (in millions) | Q2 2025 Adjusted EBITDA/OIBDA | Q2 2024 Adjusted EBITDA/OIBDA | YoY Change | | :-------------------- | :---------------------------- | :---------------------------- | :--------- | | Array Wireless | $174 | $196 | ($22) | | Array Towers | $34 | $31 | $3 |