Regional carrier UScellular added 28,000 connected devices in the third quarter, but didn’t report any net postpaid phone subscribers adds as a loss of feature phone connections canceled out the same number of net smartphone gains.
Chicago-based UScellular operates in 21 states serving approximately 5 million customers, including 4.4 million postpaid connections. Thursday’s results represent the first financial quarter since Laurent Therivel, former CEO of AT&T Mexico, took the helm at UScellular in July.
In the three-month period, UScellular recorded 8,000 net postpaid smartphone additions, but lost the same number of lower-value feature phone connections – resulting in zero net handset adds. It's an improvement over the 2,000 net handset losses in the same period a year ago and postpaid ARPU of $47.10 in Q3 was up both sequentially and year over year.
Prepaid net additions were 11,000, compared to 9,000 in Q3 2019.
The carrier saw more demand for connected devices in Q3, which it tied to the increased need for remote connectivity amid COVID-19, according to a 10-K filing.
With less switching activity, UScellular’s handset churn remained low in Q3 at 0.88%, versus 1.09% a year ago.
Service revenues were of $775 million were flat year over year, as retail service increased 2% year over year to $683 million and inbound roaming revenues declined 23% to $42 million. According to the 10-K, the carrier expects inbound roaming revenues to continue to decline because of both a decrease in rates, and the Sprint and T-Mobile merger.
Equipment sales in the third quarter were down 2% to $252 million.
Profits increased, with net income of $85 million and diluted earnings per share (EPS) of $0.97 in Q3, compared to $23 million and $0.27, respectively, in the year ago period.
"Our strong financial performance this quarter is a testament to the value consumers ascribe to wireless services and UScellular's unwavering commitment to customer experience," said Therivel in a statement. “We had higher ARPU which, combined with maintaining our operational and cost discipline throughout the quarter, helped to drive increases in profitability compared to the same period one year ago. This puts us in a strong position as we approach a very non-traditional holiday selling season and resulted in an increase in our expectations for full-year financial results.”
Speaking last week during GSMA’s Thrive North America virtual event, Therivel said one of the things that separates UScellular from other wireless carriers is its focus on serving underserved areas, particularly in rural America.
And while he acknowledged rural consumers are excited about new technology and potential benefits of 5G, another key message Therivel stressed is that many feel they are being left behind.
“I’m concerned that when it comes to connecting these communities to affordable, high-speed networks, we’re failing some of them,” Therivel said during a CTIA Summit at Thrive, speaking of the industry overall. “As important as 5G adoption is, it’s just as critical that it doesn’t become a new barrier for some of the communities that we serve.”
To that end he encouraged the wireless industry to focus on what Therivel categorized as two related but separate goals of developing a comprehensive 5G strategy that accelerates U.S. innovation and leadership; and a strategy for bridging the digital divide and connecting the underserved “regardless of ‘G’.”
UScellular launched 5G earlier this year, and service is available in parts of Iowa, Maine, Maryland, North Carolina, Oregon, Virginia, Washington, West Virginia and Wisconsin.
5G is expected to be available in the majority of its 21-state footprint by year-end and all markets by the first quarter of 2021.
The carrier also banked a 5G achievement with Ericsson and Qualcomm in September, completing an extended range 5G mmWave data call over a distance of more than 5 kilometers at speeds of 100 Mbps near the edge, to 1.8 Gbps closer to the cell site.
However, there has also been a strong focus on investing and upgrading its 4G LTE network, including a VoLTE deployment that will wrap up in the fourth quarter of this year.
At the GSMA Thrive North America event, Therivel reiterated the view that “the vast majority of our customers' needs can be served effectively with current technology,” adding that the industry needs to work together to make it affordable and accessible.
UScellular’s third-quarter earnings call is Friday, November 6.