U.S. Cellular Postpaid Losses Continue, Financials Up
U.S. Cellular's customer base dwindled further during the first quarter as it continued a string of customer losses extending back to mid-2010, but the company managed to increase sales and profits.
The company lost 34,000 net retail customers during the first three months of the year after the departure of 38,000 postpaid subscribers failed to offset the addition of 4,000 prepaid subscribers. Including its other customers, it lost a total of 49,000 customers.
U.S. Cellular has posted a net loss of retail customers every quarter since June 2010 as subscribers continue to defect to larger operators with popular devices like the iPhone. Its subscriber base now stands at 5.84 million, from 6.14 million when declines began to worsen about 21 months ago.
CEO Mary Dillon has attempted to buck the trend with its Belief Plans, which have so far been adopted by 3.3 million customers, and an increased focus on smartphones, now comprising 34 percent of its postpaid base. It also has attempted to bolster growth in its prepaid division by offering no-contract service in Walmart stores through a partnership with Alltel Wireless.
Despite troubles retaining customers, U.S. Cellular managed to increase profits to $62.5 million, a 78 percent increase over last year. Its smartphone strategy contributed to a year-over-year increase in service revenue, which inched up 4 percent to $1.02 billion as customers used more data.
Postpaid ARPU rose to $54, from $51.21 last year, and total ARPU was $58.21. Churn came in at 1.6 percent, up two-tenths of a percentage point from last year.
Rising data traffic prompted U.S. Cellular to roll out tiered data plans earlier this week designed to rein in usage. Dillon said the company has taken some cost-cutting measures, extending the phone upgrade period from 18 to 22 months and culling its device replacement program from its new plans.
U.S. Cellular is in the midst of rolling out an LTE network. Dillon said the company's deployment was "on track."
It has so far launched the service in Iowa, Maine, North Carolina, Oklahoma, Texas and Wisconsin. Coverage is slated to expand to Illinois, Maryland, Missouri, New Hampshire, Oregon, Tennessee, Vermont, Virginia, Washington and West Virginia during the second half of this year.