U.S. Cellular's Q3 Earnings Beat Estimate, Revenues Decline Y/Y

Core Viewpoint - U.S. Cellular Corporation (USM) reported mixed results for Q3 2024, with net income exceeding estimates but revenue falling short due to a decline in retail connections [1][3][4]. Financial Performance - The company reported a net loss of $79 million, equating to a loss of 92 cents per share, while net income excluding license impairment charges was $23 million or 26 cents, matching the previous year's quarter [3]. - Operating revenues were $922 million, down from $963 million year-over-year, missing the Zacks Consensus Estimate of $941 million [4]. - Service revenues decreased to $747 million from $762 million, beating the Zacks Consensus Estimate of $742.31 million, while equipment sales fell to $175 million from $201 million [5]. Customer Metrics - Fixed wireless customers grew by 32% year-over-year to 140,000, and the tower business generated revenues of $59 million, up 2% year-over-year [6]. - Total postpaid connections declined to 3,999,000 from 4,159,000 year-over-year, while total prepaid connections decreased to 452,000 from 462,000 [7]. Revenue and Churn Rates - Postpaid average revenues per account improved to $131.81 from $130.91, with postpaid churn rates of 1.25% compared to 1.30% a year ago [8]. - Prepaid ARPU was $32.01, down from $33.44, while the prepaid churn rate decreased to 3.30% from 3.68% [8]. Operational Metrics - Adjusted EBITDA for the quarter was $269 million, up from $263 million in the prior-year quarter, while adjusted OIBDA was $222 million, slightly up from $220 million [9]. - Total operating expenses increased to $1.01 billion, resulting in an operating loss of $90 million compared to an income of $57 million in the previous year [9]. Cash Flow and Liquidity - Cash generated from operating activities was $245 million, down from $329 million year-over-year, with cash and cash equivalents at $272 million and long-term debt at $2.88 billion as of September 30, 2024 [10]. Future Outlook - For 2024, U.S. Cellular estimates service revenues between $2,950 million and $3,000 million, with adjusted OIBDA projected between $800 million and $875 million [11].