US Cellular came out of Q3 with mixed results, adding both pre- and postpaid subscribers but reporting a slide in revenue and a net loss of $229 million.
The fifth largest US operator said it gained 35,000 postpaid subscribers in the quarter, and also drew in 31,000 new subscribers on the prepaid side of the house. Those figures compare to a net loss of 6,000 postpaid subscribers and prepaid net additions of 67,000 the year prior.
In total the operator now has 4.51 million postpaid subs (up slightly from 4.49 million last year) and 515,000 total prepaid subs (up from 480,000).
However, US Cellular reported a 6 per cent year-on-year dip in service revenue to $737 million as well as a 5 per cent drop in equipment sales to $226 million. Total operating revenue of $963 million was down from $1.02 billion the year prior.
The operator’s $229 million loss marked a departure from the $17 million in net income it posted in the same period last year. Both pre-and postpaid average revenue per user also dropped year-on-year.
Still, US Cellular CEO Kenneth Meyers indicated he was happy with the company’s performance.
“I am quite pleased with the operating results for the quarter as we continued to build on the momentum of the previous quarter, growing subscribers and increasing customer loyalty while tightly managing costs,” Meyers said in a statement. “Overall, we are competing effectively in the marketplace…We believe we have found a good balance of promotional offers to get new customers into our stores.”
But Wells Fargo Securities analyst Jennifer Fritzsche noted US Cellular could soon face additional headwinds.
“With [Sprint] and [T-Mobile] continuing to operate as separate entities, we would expect pricing pressures to only pick up around the iPhone cycle in Q4’17 and Q1’18,” she wrote in a research note. “Furthermore, the ongoing geographic expansion of [T-Mobile] likely will also create more competitive pressures in certain [US Cellular] core markets.”
US Cellular’s unlimited plan now has a significant following, with nearly a third of the operator’s base taking up the offer. These plans have driven a 51 per cent year-on-year increase in data use on US Cellular’s network. The operator said average handset data usage has reached 3.1GB per month, but noted unlimited plan customers are consuming nearly three times that amount.