United States Cellular Corporation (USM - Analyst Report), a subsidiary of Telephone and Data Systems Inc. (TDS - Analyst Report) has launched the 4G handset Samsung Galaxy Metrix, which is available online on the company’s website, uscellular.com. The phone will be also available in some select stores of U.S. Cellular from August 24. Depending upon the location, the price for the 4G handset will vary between $129.00 and $179.00 both after a $100 rebate.
U.S. Cellular’s latest addition, Samsung Galaxy Metrix will run on 4G LTE networks in markets where the 4G network is active. In the rest of the areas, it will operate through U.S. Cellular's nationwide 3G network coverage. The company in collaboration with King Street Wireless offers 4G LTE service in 31% of its entire market base. These include cities in states like Iowa, Maine, North Carolina, Oklahoma, Texas and Wisconsin.
U.S. Cellular further plans to expand its 4G coverage to cities in Illinois, Maryland, Missouri, New Hampshire, Oregon, Tennessee, Vermont, Virginia, Washington and West Virginia. By end of the year, the company targets to bring 58% of its customer base under 4G coverage.
The company also plans to launch additional 4G LTE phones and modems throughout the year. Higher adoption and penetration of these devices are expected to drive revenues going forward. Additionally, equipment pricing is expected to remain competitive given the continued demand shift toward smartphones and a long line-up of 4G devices. Further, these smartphones remain the key drivers of the company’s data revenues as they are backed by U.S. Cellular’s high-speed nationwide wireless networks.
In the second quarter of 2012, smartphone sales represented approximately 52% of equipment sales and are expected to remain a key factor in driving revenue ahead.
We have a long-term Outperform recommendation for United States Cellular Corporation. Currently, the stock holds a Zacks #3 Rank, implying a short-term Hold rating.