On August 2, 2024, United States Cellular Corp (USM, Financial) released its 8-K filing detailing its financial performance for the second quarter of 2024. UScellular, a regional wireless carrier serving approximately 4.5 million customers across the Midwest, mid-Atlantic, New England, and the Pacific Northwest, reported mixed results for the quarter.
Performance Overview
United States Cellular Corp (USM, Financial) reported total operating revenues of $927 million for Q2 2024, a 3% decline from $957 million in the same period last year. Service revenues also saw a slight decrease, totaling $743 million compared to $760 million in Q2 2023. Despite the revenue decline, the company posted a significant increase in net income attributable to UScellular shareholders, which rose to $17 million, or $0.20 per diluted share, up from $5 million, or $0.05 per diluted share, in the same period last year.
Key Financial Achievements
UScellular's financial achievements for Q2 2024 include:
- Sequential improvement in postpaid gross additions and a reduction in postpaid net losses.
- Postpaid ARPU (Average Revenue Per User) grew by 2%, although service revenues decreased by 2%.
- Third-party tower revenues increased by 1%, and fixed wireless customers grew by 40% to 134,000.
- Strong cost management across the enterprise led to increased operating income, net income, and Adjusted OIBDA.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Total Operating Revenues | $927 million | $957 million | -3% |
| Service Revenues | $743 million | $760 million | -2% |
| Net Income Attributable to UScellular Shareholders | $17 million | $5 million | N/M |
| Diluted Earnings Per Share | $0.20 | $0.05 | N/M |
Balance Sheet and Cash Flow Highlights
As of June 30, 2024, UScellular reported total assets of $10.64 billion, slightly down from $10.75 billion at the end of 2023. The company also reported a net increase in cash, cash equivalents, and restricted cash to $215 million, up from $179 million at the beginning of the period.
Commentary and Strategic Moves
"Solid postpaid ARPU growth and continued strong expense discipline is keeping us on track to deliver on our financial guidance," said Laurent C. Therivel, UScellular President and CEO. "We have taken actions to improve subscriber results that have led to sequential improvement in postpaid handset net additions in the second quarter. While postpaid handset net additions remained negative, we are encouraged by the positive momentum."
On May 28, 2024, UScellular announced a definitive agreement to sell its wireless operations and select spectrum assets to T-Mobile, a transaction expected to close in mid-2025. The company retains nearly 4,400 owned towers and approximately 70% of its spectrum assets, which it seeks to monetize opportunistically.
Analysis and Outlook
While UScellular's revenue decline poses a challenge, the company's strong cost management and improved net income are positive indicators. The strategic sale to T-Mobile and the focus on monetizing remaining spectrum assets could provide additional financial stability and growth opportunities. Investors should monitor the company's ability to maintain its ARPU growth and manage expenses effectively in the coming quarters.
For more detailed financial information and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from United States Cellular Corp for further details.
