UScellular reports fourth quarter and full year 2023 results
- UScellular reported $1,000 million in total operating revenues for Q4 2023, with net income of $14 million and earnings per share of $0.16.
- Full-year 2023 highlights include postpaid ARPU growth of 2%, a 46% increase in fixed wireless customers, and an 8% growth in tower rental revenues.
- UScellular plans to focus on subscriber results, fixed wireless, and financial discipline in 2024.
- Recent developments involve exploring strategic alternatives with Telephone and Data Systems, Inc. (TDS).
- Estimated 2024 results show service revenues between $2,950-$3,050 million, adjusted OIBDA between $750-$850 million, adjusted EBITDA between $920-$1,020 million, and capital expenditures between $550-$650 million.
- None.
Insights
The reported operating revenues and net income for UScellular are critical indicators of the company's financial health. A year-over-year decrease in operating revenues from $1,048 million to $1,000 million in Q4 and from $4,169 million to $3,906 million annually suggests a contraction in the company's revenue-generating capabilities. However, the increase in net income from $(28) million to $14 million for Q4 and from $30 million to $54 million annually, indicates improved profitability. This could be attributable to effective cost management or improved operational efficiency.
Investors should note the growth in Postpaid ARPU and the significant expansion in fixed wireless customers by 46%, which may signal an evolving revenue mix and a strategic shift towards more stable revenue streams. The 8% growth in tower rental revenues to $100 million also highlights a potentially lucrative diversification strategy. The company's guidance for 2024, including service revenues and capital expenditure forecasts, provides a roadmap for expected performance and investment priorities.
The emphasis on 5G mid-band network deployment is a strategic move for UScellular, as it aligns with industry trends prioritizing network speed and reliability. This technology is crucial for maintaining competitiveness in the telecommunications sector. The reference to an 'aggressive competitive environment' acknowledges the high level of competition in the industry, which can pressure prices and customer loyalty.
It's also interesting to observe the company's focus on fixed wireless growth. This suggests a response to increasing consumer demand for alternative broadband solutions, which could open new revenue channels and reduce churn. The potential strategic alternatives for UScellular, mentioned without detail, could include mergers, acquisitions, or divestitures and should be monitored closely as they may significantly impact the company's future direction and stock performance.
The reconciliation of non-GAAP financial measures such as EBITDA, Adjusted EBITDA and Adjusted OIBDA to GAAP measures is an important exercise for stakeholders to understand the non-operational factors affecting profitability. Adjusted EBITDA and Adjusted OIBDA exclude significant non-cash charges and nonrecurring items, which can provide a clearer picture of the company's ongoing operational performance.
However, the exclusion of anticipated costs and results of the strategic review from the 2024 estimated results may lead to a lack of transparency regarding potential future expenses or income that could materially affect the company's financial position. Stakeholders should be wary of the impact of income taxes on future profitability, as the company has not provided guidance on this, citing the inability to predict these figures reasonably.
Provides guidance for 2024
As previously announced, UScellular will hold a teleconference on February 16, 2024 at 9:00 a.m. CST. Listen to the call live via the Events & Presentations page of investors.uscellular.com.
United States Cellular Corporation (NYSE: USM) reported total operating revenues of
UScellular reported total operating revenues of
Full-year 2023 Highlights*
- Postpaid ARPU grew
2% - Delivering on growth initiatives
- Fixed wireless customers grew
46% to 114,000 - Tower rental revenues grew
8% to$100 million
- Fixed wireless customers grew
- Increased profitability
- Net income, Adjusted OIBDA and Adjusted EBITDA up
- Generated positive free cash flow and increased cash flows from operating activities
- Began launching 5G mid-band network - providing low latency and faster speeds
*Comparisons are Year Ended December 31, 2023 to Year Ended December 31, 2022
"At UScellular, we are focused on connecting people to what matters most," said Laurent Therivel, UScellular President and CEO. "In 2023, Postpaid ARPU increased
"In 2024, we plan to continue focusing on improving subscriber results, driving growth in fixed wireless and towers, and maintaining financial discipline as we advance the network through our mid-band deployment."
Recent Development: On August 4, 2023, Telephone and Data Systems, Inc. (TDS) and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular. The process is still ongoing.
2024 Estimated Results
UScellular's current estimates of full-year 2024 results are shown below. Such estimates represent management's view as of February 16, 2024 and should not be assumed to be current as of any future date. UScellular undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.
2024 Estimated | Actual Results for the Year Ended December 31, 2023 | ||
(Dollars in millions) | |||
Service revenues | |||
Adjusted OIBDA1, 2 | |||
Adjusted EBITDA1, 2 | |||
Capital expenditures |
The following table reconciles EBITDA, Adjusted EBITDA, and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2024 estimated results, UScellular has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, UScellular believes that the impact of income taxes cannot be reasonably predicted; therefore, UScellular is unable to provide such guidance.
2024 Estimated | Actual Results for the Year Ended December 31, 2023 | Actual Results for | |||
(Dollars in millions) | |||||
Net income (GAAP) | N/A | ||||
Add back: | |||||
Income tax expense | N/A | 53 | 37 | ||
Income before income taxes (GAAP) | |||||
Add back: | |||||
Interest expense | 195 | 196 | 163 | ||
Depreciation, amortization and accretion expense | 665 | 656 | 700 | ||
EBITDA (Non-GAAP)1 | |||||
Add back or deduct: | |||||
Expenses related to strategic alternatives review | — | 8 | — | ||
Loss on impairment of licenses | — | — | 3 | ||
(Gain) loss on asset disposals, net | 20 | 17 | 19 | ||
(Gain) loss on sale of business and other exit costs, net | — | — | (1) | ||
(Gain) loss on license sales and exchanges, net | — | (2) | — | ||
Adjusted EBITDA (Non-GAAP)1 | |||||
Deduct: | |||||
Equity in earnings of unconsolidated entities | 160 | 158 | 158 | ||
Interest and dividend income | 10 | 10 | 8 | ||
Adjusted OIBDA (Non-GAAP)1 | |||||
1 | EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in |
2 | 2024 Estimated Results do not reflect any anticipated costs, expenses or results of the strategic alternatives review referenced above. |
Conference Call Information
UScellular will hold a conference call on February 16, 2024 at 9:00 a.m. Central Time.
- Access the live call on the Events & Presentations page of investors.uscellular.com or at https://events.q4inc.com/attendee/105947395
- Access the call by phone at (888) 330-2384 (US/
Canada ), conference ID: 1328528
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.
About UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.6 million retail connections in 21 states. The
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: whether any strategic alternatives for UScellular will be successfully identified or completed; whether any such strategic alternative will result in additional value for UScellular and its shareholders and whether the process will have an adverse impact on UScellular's business; intense competition; the ability to attract people of outstanding talent throughout all levels of the organization; UScellular's smaller scale relative to larger competitors; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which UScellular does business; uncertainties in UScellular's future cash flows and liquidity and access to the capital markets; the ability to make payments on UScellular indebtedness or comply with the terms of debt covenants; conditions in the
For more information about UScellular, visit: www.uscellular.com
United States Cellular Corporation Summary Operating Data (Unaudited) | |||||||||
As of or for the Quarter Ended | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | ||||
Retail Connections | |||||||||
Postpaid | |||||||||
Total at end of period | 4,106,000 | 4,159,000 | 4,194,000 | 4,223,000 | 4,247,000 | ||||
Gross additions | 129,000 | 128,000 | 125,000 | 137,000 | 154,000 | ||||
Handsets | 80,000 | 84,000 | 83,000 | 93,000 | 105,000 | ||||
Connected devices | 49,000 | 44,000 | 42,000 | 44,000 | 49,000 | ||||
Net additions (losses) | (50,000) | (35,000) | (28,000) | (24,000) | (17,000) | ||||
Handsets | (53,000) | (38,000) | (29,000) | (25,000) | (20,000) | ||||
Connected devices | 3,000 | 3,000 | 1,000 | 1,000 | 3,000 | ||||
ARPU1 | $ 51.61 | $ 51.11 | $ 50.64 | $ 50.66 | $ 50.60 | ||||
ARPA2 | $ 131.63 | $ 130.91 | $ 130.19 | $ 130.77 | $ 130.97 | ||||
Handset upgrade rate3 | 5.8 % | 4.5 % | 4.8 % | 4.9 % | 7.0 % | ||||
Churn rate4 | 1.44 % | 1.30 % | 1.21 % | 1.27 % | 1.35 % | ||||
Handsets | 1.22 % | 1.11 % | 1.01 % | 1.06 % | 1.12 % | ||||
Connected devices | 3.03 % | 2.64 % | 2.65 % | 2.78 % | 2.99 % | ||||
Prepaid | |||||||||
Total at end of period | 451,000 | 462,000 | 462,000 | 470,000 | 493,000 | ||||
Gross additions | 43,000 | 52,000 | 50,000 | 43,000 | 61,000 | ||||
Net additions (losses) | (11,000) | — | (8,000) | (23,000) | — | ||||
ARPU1, 5 | $ 32.32 | $ 33.44 | $ 33.86 | $ 33.19 | $ 33.34 | ||||
Churn rate4 | 3.87 % | 3.68 % | 4.18 % | 4.63 % | 4.11 % | ||||
Market penetration at end of period | |||||||||
Consolidated operating population | 32,350,000 | 32,350,000 | 32,350,000 | 32,350,000 | 32,370,000 | ||||
Consolidated operating penetration6 | 15 % | 15 % | 15 % | 15 % | 15 % | ||||
Capital expenditures (millions) | $ 148 | $ 111 | $ 143 | $ 208 | $ 176 | ||||
Total cell sites in service | 7,000 | 6,973 | 6,952 | 6,950 | 6,945 | ||||
Owned towers | 4,373 | 4,356 | 4,341 | 4,338 | 4,336 | ||||
Due to rounding, the sum of quarterly results may not equal the total for the year. | |
1 | Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below:
|
2 | Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period. |
3 | Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections. |
4 | Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period. |
5 | Fourth quarter 2023 Prepaid ARPU excludes a |
6 | Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets. |
United States Cellular Corporation | |||||||||||
Consolidated Statement of Operations Highlights | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
2023 | 2022 | 2023 vs. | 2023 | 2022 | 2023 vs. | ||||||
(Dollars and shares in millions, except per share amounts) | |||||||||||
Operating revenues | |||||||||||
Service | $ 755 | $ 774 | (3) % | $ 3,044 | $ 3,125 | (3) % | |||||
Equipment sales | 245 | 274 | (10) % | 862 | 1,044 | (17) % | |||||
Total operating revenues | 1,000 | 1,048 | (5) % | 3,906 | 4,169 | (6) % | |||||
Operating expenses | |||||||||||
System operations (excluding Depreciation, amortization and accretion reported below) | 183 | 181 | 1 % | 740 | 755 | (2) % | |||||
Cost of equipment sold | 280 | 330 | (15) % | 988 | 1,216 | (19) % | |||||
Selling, general and administrative | 349 | 374 | (7) % | 1,368 | 1,408 | (3) % | |||||
Depreciation, amortization and accretion | 166 | 179 | (8) % | 656 | 700 | (6) % | |||||
Loss on impairment of licenses | — | — | — | — | 3 | N/M | |||||
(Gain) loss on asset disposals, net | 3 | 11 | (67) % | 17 | 19 | (9) % | |||||
(Gain) loss on sale of business and other exit costs, net | — | — | N/M | — | (1) | N/M | |||||
(Gain) loss on license sales and exchanges, net | (2) | — | N/M | (2) | — | N/M | |||||
Total operating expenses | 979 | 1,075 | (9) % | 3,767 | 4,100 | (8) % | |||||
Operating income (loss) | 21 | (27) | N/M | 139 | 69 | N/M | |||||
Investment and other income (expense) | |||||||||||
Equity in earnings of unconsolidated entities | 37 | 36 | 3 % | 158 | 158 | – | |||||
Interest and dividend income | 2 | 3 | (24) % | 10 | 8 | 26 % | |||||
Interest expense | (49) | (49) | (3) % | (196) | (163) | (21) % | |||||
Total investment and other income (expense) | (10) | (10) | (10) % | (28) | 3 | N/M | |||||
Income (loss) before income taxes | 11 | (37) | N/M | 111 | 72 | 54 % | |||||
Income tax expense (benefit) | (4) | (9) | 64 % | 53 | 37 | 43 % | |||||
Net income (loss) | 15 | (28) | N/M | 58 | 35 | 67 % | |||||
Less: Net income attributable to noncontrolling interests, net of tax | 1 | — | (53) % | 4 | 5 | (24) % | |||||
Net income (loss) attributable to UScellular shareholders | $ 14 | $ (28) | N/M | $ 54 | $ 30 | 80 % | |||||
Basic weighted average shares outstanding | 85 | 85 | 1 % | 85 | 85 | – | |||||
Basic earnings (loss) per share attributable to UScellular shareholders | $ 0.17 | N/M | $ 0.64 | $ 0.35 | 81 % | ||||||
Diluted weighted average shares outstanding | 88 | 85 | 3 % | 87 | 86 | – | |||||
Diluted earnings (loss) per share attributable to UScellular shareholders | $ 0.16 | N/M | $ 0.63 | $ 0.35 | 79 % | ||||||
N/M - Percentage change not meaningful | |||||||||||
United States Cellular Corporation | |||
Consolidated Statement of Cash Flows | |||
(Unaudited) | |||
Year Ended December 31, | 2023 | 2022 | |
(Dollars in millions) | |||
Cash flows from operating activities | |||
Net income | $ 58 | $ 35 | |
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | |||
Depreciation, amortization and accretion | 656 | 700 | |
Bad debts expense | 104 | 132 | |
Stock-based compensation expense | 23 | 24 | |
Deferred income taxes, net | 47 | 33 | |
Equity in earnings of unconsolidated entities | (158) | (158) | |
Distributions from unconsolidated entities | 150 | 145 | |
Loss on impairment of licenses | — | 3 | |
(Gain) loss on asset disposals, net | 17 | 19 | |
(Gain) loss on sale of business and other exit costs, net | — | (1) | |
(Gain) loss on license sales and exchanges, net | (2) | — | |
Other operating activities | 6 | 9 | |
Changes in assets and liabilities from operations | |||
Accounts receivable | 17 | (59) | |
Equipment installment plans receivable | (20) | (199) | |
Inventory | 62 | (88) | |
Accounts payable | (85) | 12 | |
Customer deposits and deferred revenues | (9) | 47 | |
Accrued taxes | — | 121 | |
Other assets and liabilities | — | 57 | |
Net cash provided by operating activities | 866 | 832 | |
Cash flows from investing activities | |||
Cash paid for additions to property, plant and equipment | (608) | (602) | |
Cash paid for licenses | (130) | (585) | |
Other investing activities | 17 | 8 | |
Net cash used in investing activities | (721) | (1,179) | |
Cash flows from financing activities | |||
Issuance of long-term debt | 315 | 800 | |
Repayment of long-term debt | (453) | (329) | |
Issuance of short-term debt | — | 110 | |
Repayment of short-term debt | (60) | (50) | |
Common Shares reissued for benefit plans, net of tax payments | (6) | (5) | |
Repurchase of Common Shares | — | (43) | |
Payment of debt issuance costs | (1) | (1) | |
Distributions to noncontrolling interests | (3) | (3) | |
Cash paid for software license agreements | (66) | (22) | |
Other financing activities | — | (1) | |
Net cash provided by (used in) financing activities | (274) | 456 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (129) | 109 | |
Cash, cash equivalents and restricted cash | |||
Beginning of period | 308 | 199 | |
End of period | $ 179 | $ 308 | |
United States Cellular Corporation | |||
Consolidated Balance Sheet Highlights | |||
(Unaudited) | |||
ASSETS | |||
December 31, | 2023 | 2022 | |
(Dollars in millions) | |||
Current assets | |||
Cash and cash equivalents | $ 150 | $ 273 | |
Accounts receivable, net | 957 | 1,072 | |
Inventory, net | 199 | 261 | |
Prepaid expenses | 57 | 68 | |
Income taxes receivable | 1 | 4 | |
Other current assets | 36 | 45 | |
Total current assets | 1,400 | 1,723 | |
Assets held for sale | 15 | 26 | |
Licenses | 4,693 | 4,690 | |
Investments in unconsolidated entities | 461 | 452 | |
Property, plant and equipment, net | 2,576 | 2,624 | |
Operating lease right-of-use assets | 915 | 918 | |
Other assets and deferred charges | 690 | 686 | |
Total assets | $ 10,750 | $ 11,119 | |
United States Cellular Corporation | |||
Consolidated Balance Sheet Highlights | |||
(Unaudited) | |||
LIABILITIES AND EQUITY | |||
December 31, | 2023 | 2022 | |
(Dollars in millions, except per share amounts) | |||
Current liabilities | |||
Current portion of long-term debt | $ 20 | $ 13 | |
Accounts payable | 248 | 356 | |
Customer deposits and deferred revenues | 229 | 239 | |
Accrued taxes | 32 | 35 | |
Accrued compensation | 83 | 84 | |
Short-term operating lease liabilities | 135 | 133 | |
Other current liabilities | 154 | 335 | |
Total current liabilities | 901 | 1,195 | |
Deferred liabilities and credits | |||
Deferred income tax liability, net | 755 | 708 | |
Long-term operating lease liabilities | 831 | 843 | |
Other deferred liabilities and credits | 565 | 604 | |
Long-term debt, net | 3,044 | 3,187 | |
Noncontrolling interests with redemption features | 12 | 12 | |
Equity | |||
UScellular shareholders' equity | |||
Series A Common and Common Shares, par value | 88 | 88 | |
Additional paid-in capital | 1,726 | 1,703 | |
Treasury shares | (80) | (98) | |
Retained earnings | 2,892 | 2,861 | |
Total UScellular shareholders' equity | 4,626 | 4,554 | |
Noncontrolling interests | 16 | 16 | |
Total equity | 4,642 | 4,570 | |
Total liabilities and equity | $ 10,750 | $ 11,119 | |
United States Cellular Corporation Financial Measures and Reconciliations (Unaudited) | |||||||
Free Cash Flow | |||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(Dollars in millions) | |||||||
Cash flows from operating activities (GAAP) | $ 148 | $ 180 | $ 866 | $ 832 | |||
Cash paid for additions to property, plant and equipment | (155) | (192) | (608) | (602) | |||
Cash paid for software license agreements | (37) | (17) | (66) | (22) | |||
Free cash flow (Non-GAAP)1 | $ (44) | $ (29) | $ 192 | $ 208 | |||
1 | Free cash flow is a non-GAAP financial measure which UScellular believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements. |
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SOURCE United States Cellular Corporation
FAQ
What were UScellular's total operating revenues for the fourth quarter of 2023?
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What were the full-year 2023 highlights for UScellular?
What are UScellular's focus areas for 2024?
What recent development involves UScellular and Telephone and Data Systems, Inc. (TDS)?
What are UScellular's estimated 2024 results for service revenues, adjusted OIBDA, adjusted EBITDA, and capital expenditures?
