U.S. Cellular(USM) - 2022 Q4 - Annual Report

Financial Performance - Total operating revenues for 2022 were $4,169 million, a 1% increase from $4,122 million in 2021[141] - UScellular's adjusted EBITDA for 2022 was $956 million, down 9% from $1,054 million in 2021[141] - Operating income decreased by 59% to $69 million in 2022 from $170 million in 2021[154] - Net income attributable to UScellular shareholders fell by 81% to $30 million in 2022 compared to $155 million in 2021[154] - Basic earnings per share attributable to UScellular shareholders fell to $0.35 in 2022, a decrease of 80.6% compared to $1.80 in 2021[244] - UScellular's net income for 2022 was $35 million, a decrease from $160 million in 2021[238] - Adjusted EBITDA for 2022 was $956 million, down from $1,054 million in 2021, indicating a decline of approximately 9.3%[238] - Operating expenses increased to $4,100 million in 2022, up 3.7% from $3,952 million in 2021[244] Customer Metrics - UScellular serves 4.7 million retail connections, including 4.2 million postpaid and 0.5 million prepaid connections as of December 31, 2022[133] - The company experienced a net loss of 133,000 postpaid connections in 2022, attributed to aggressive competition and increased promotional spending[149] - The churn rate for postpaid handsets increased to 1.12% in 2022 from 0.96% in 2021, indicating higher customer turnover[140] - Postpaid Average Revenue Per User (ARPU) increased by 4% to $50.14 in 2022, while Average Revenue Per Account (ARPA) also rose by 4% to $130.39[139] Capital Expenditures and Investments - Total capital expenditures for 2022 were $717 million, an 8% decrease from $780 million in 2021[141] - Capital expenditures for 2022 were focused on network modernization, 5G deployment, and IT investments, with expected expenditures for 2023 between $600 million and $700 million[183] - UScellular was the provisional winning bidder for 254 wireless spectrum licenses for $1,283 million in Auction 107, with the remaining amount paid in March 2021[220] Debt and Liquidity - Long-term debt increased by $459 million, reaching a total of $3,187 million by December 31, 2022[203] - UScellular's total undrawn borrowing capacity as of December 31, 2022, was $615 million, including $300 million from the revolving credit agreement[166] - The company has a maximum borrowing capacity of $800 million under term loan agreements, with outstanding borrowings of $796 million as of December 31, 2022[168] - Cash, cash equivalents, and restricted cash increased by $109 million in 2022, with net cash provided by operating activities amounting to $832 million[192] Revenue Streams - UScellular's total revenues from contracts with customers for 2022 were $4,076 million, an increase from $4,039 million in 2021 and $3,960 million in 2020[308] - Retail service revenues for 2022 were $2,793 million, compared to $2,757 million in 2021 and $2,681 million in 2020, indicating a steady growth trend[308] - Equipment sales reached $1,044 million in 2022, up from $1,007 million in 2021 and $970 million in 2020, reflecting a positive sales trajectory[308] Competition and Market Conditions - The company faced intense competition, which could adversely affect revenues and increase costs[226] - UScellular's ability to attract and retain talent is critical, as failure to do so could negatively impact its operations[226] Shareholder Returns - UScellular repurchased 1,589,784 Common Shares for $43 million at an average cost per share of $26.78 during 2022[188] - The company repurchased common shares amounting to $43 million in 2022, compared to $31 million in 2021, indicating a strategy to return value to shareholders[257] Bad Debts and Credit Risk - Bad debts expense increased by $76 million in 2022 due to a return to pre-COVID-19 customer payment behavior[153] - The company reported a bad debts expense of $132 million in 2022, significantly higher than $56 million in 2021, indicating increased credit risk[246] - The allowance for credit losses for equipment installment plan receivables rose from $72 million in 2021 to $96 million in 2022[323] Tax and Regulatory Matters - UScellular received a tax refund of $123 million in early 2022 related to the 2020 net operating loss carryback enabled by the CARES Act[157] - The company recognized a tax receivable balance of $123 million from TDS as of December 31, 2021, which was settled in January 2022[291]