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United States Cellular (USM) Tops Q4 Earnings, Revenues Lag
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United States Cellular Corp. (USM - Free Report) – a subsidiary of Telephone & Data Systems Inc. (TDS - Free Report) – posted mixed financial results in the fourth quarter of 2016. While the top line missed the Zacks Consensus Estimate, the bottom line was better than the mark.
In the fourth quarter of 2016, GAAP net loss came in at $6 million or a loss of 7 cents per share compared with a net loss of $2 million or a loss of 2 cents per share in the year-ago quarter. Quarterly loss per share of 7 cents was narrower than the Zacks Consensus Estimate of 8 cents per share.
Quarterly revenues of $991 million were up 0.4% year over year but fell short of the Zacks Consensus Estimate of $1,022.6 million. Quarterly Service revenues decreased 8% to $737 million. Revenues from Equipment sales surged 37% to $254 million.
Smartphone sales retained strength and represented 79% penetration among postpaid customers, up from 74% recorded at the end of 2015. Total cell sites in service were 6,415 compared with 6,297 at the end of 2015. Smartphones sold, as a percentage of total handsets sold, constituted 93% compared with 91% at 2015-end.
Operating Expenses and Income
In the fourth quarter of 2016, total operating expenses inched up 1% to $1,020 million. Moreover, the company reported an operating loss of $29 million compared with an operating loss of $24 million in the prior-year quarter.
Cash Flow
In the quarter under review, cash from operations came in at $86 million compared with $0 (no cash generation) in the prior-year quarter. Quarterly adjusted free cash flow was a negative $76 million compared with a negative $172 million in the year-ago quarter.
Liquidity
United States Cellular exited the 2016 with cash and cash equivalents of $586 million compared with $715 million at the end of 2015. At 2016 end, total debt was $1,629 million, remains flat with the end of 2015. The debt-to-capitalization ratio at the end of 2016 was 0.31 compared with 0.23 at 2015-end.
ARPU & Churn
Quarterly postpaid ARPU (average revenue per user) decreased to $45.19 from $51.46 at the end of 2015. Postpaid ARPA (average revenue per account) was $120.67 compared with $131.96 at the end of 2015. Postpaid churn rose to 1.41% from 1.31% recorded at the end of 2015. Prepaid ARPU decreased to $33.25 from $35.54 recorded at the end of 2015. Prepaid churn increased to 5.44% in the reported quarter from 5.40% at 2015-end.
Subscriber Statistics
United States Cellular exited 2016 with a subscriber base of 5,031,000 compared with 4,876,000 at the end of 2015. Postpaid subscriber base totaled 4,482,000 compared with 4,409,000 at 2015-end. Meanwhile, prepaid subscriber base totaled 484,000 compared with 387,000 at the end of 2015. In the reported quarter, United States Cellular lost a net of 2,000 postpaid subscribers compared with the addition of 68,000 in the year-ago quarter. The company gained 4,000 prepaid customers in the same quarter compared with 7,000 in the prior-year quarter.
Guidance for 2017
United States Cellular expects total operating revenue in the band of $3,800–$4,000 million. Adjusted EBITDA is projected at $650–$800 million while capital expenditure is estimated at around $500 million. The company projects operating cash flow in the range of $500–$650 million.
Recent Development
United States Cellular currently carries a Zacks Rank #4 (Sell). The company took part in the bidding process of the recently concluded 600-MHz low-band wireless frequency auction conducted by the FCC. However, the FCC is yet to release the name of the frequency winners. Other major companies that took part in the auction were Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) to name a few. All three stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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United States Cellular (USM) Tops Q4 Earnings, Revenues Lag
United States Cellular Corp. (USM - Free Report) – a subsidiary of Telephone & Data Systems Inc. (TDS - Free Report) – posted mixed financial results in the fourth quarter of 2016. While the top line missed the Zacks Consensus Estimate, the bottom line was better than the mark.
In the fourth quarter of 2016, GAAP net loss came in at $6 million or a loss of 7 cents per share compared with a net loss of $2 million or a loss of 2 cents per share in the year-ago quarter. Quarterly loss per share of 7 cents was narrower than the Zacks Consensus Estimate of 8 cents per share.
Quarterly revenues of $991 million were up 0.4% year over year but fell short of the Zacks Consensus Estimate of $1,022.6 million. Quarterly Service revenues decreased 8% to $737 million. Revenues from Equipment sales surged 37% to $254 million.
Smartphone sales retained strength and represented 79% penetration among postpaid customers, up from 74% recorded at the end of 2015. Total cell sites in service were 6,415 compared with 6,297 at the end of 2015. Smartphones sold, as a percentage of total handsets sold, constituted 93% compared with 91% at 2015-end.
Operating Expenses and Income
In the fourth quarter of 2016, total operating expenses inched up 1% to $1,020 million. Moreover, the company reported an operating loss of $29 million compared with an operating loss of $24 million in the prior-year quarter.
Cash Flow
In the quarter under review, cash from operations came in at $86 million compared with $0 (no cash generation) in the prior-year quarter. Quarterly adjusted free cash flow was a negative $76 million compared with a negative $172 million in the year-ago quarter.
Liquidity
United States Cellular exited the 2016 with cash and cash equivalents of $586 million compared with $715 million at the end of 2015. At 2016 end, total debt was $1,629 million, remains flat with the end of 2015. The debt-to-capitalization ratio at the end of 2016 was 0.31 compared with 0.23 at 2015-end.
ARPU & Churn
Quarterly postpaid ARPU (average revenue per user) decreased to $45.19 from $51.46 at the end of 2015. Postpaid ARPA (average revenue per account) was $120.67 compared with $131.96 at the end of 2015. Postpaid churn rose to 1.41% from 1.31% recorded at the end of 2015. Prepaid ARPU decreased to $33.25 from $35.54 recorded at the end of 2015. Prepaid churn increased to 5.44% in the reported quarter from 5.40% at 2015-end.
Subscriber Statistics
United States Cellular exited 2016 with a subscriber base of 5,031,000 compared with 4,876,000 at the end of 2015. Postpaid subscriber base totaled 4,482,000 compared with 4,409,000 at 2015-end. Meanwhile, prepaid subscriber base totaled 484,000 compared with 387,000 at the end of 2015. In the reported quarter, United States Cellular lost a net of 2,000 postpaid subscribers compared with the addition of 68,000 in the year-ago quarter. The company gained 4,000 prepaid customers in the same quarter compared with 7,000 in the prior-year quarter.
Guidance for 2017
United States Cellular expects total operating revenue in the band of $3,800–$4,000 million. Adjusted EBITDA is projected at $650–$800 million while capital expenditure is estimated at around $500 million. The company projects operating cash flow in the range of $500–$650 million.
Recent Development
United States Cellular currently carries a Zacks Rank #4 (Sell). The company took part in the bidding process of the recently concluded 600-MHz low-band wireless frequency auction conducted by the FCC. However, the FCC is yet to release the name of the frequency winners. Other major companies that took part in the auction were Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) to name a few. All three stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United States Cellular Corporation Price, Consensus and EPS Surprise
United States Cellular Corporation Price, Consensus and EPS Surprise | United States Cellular Corporation Quote
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>