U.S. Cellular loses 28K postpaid net phone customers in first quarter

Shopper with smartphone
U.S. Cellular said the launch of an unlimited data plan turned things around in the first quarter.

Shares of U.S. Cellular rose Friday morning after the carrier posted mixed first-quarter results. But like Verizon and AT&T, the smaller operator said the launch of an unlimited data plan helped stem significant customer losses.

U.S. Cellular saw $936 million in revenue during the quarter, falling short of analysts’ estimates of $955.2 million, according to Reuters. But earnings of 18 cents per share beat expectations of 11 cents per share, the Associated Press reported, and the company bumped up the lower end of its 2017 guidance for both operating cash flow and adjusted EBITDA.

U.S. Cellular lost 28,000 postpaid net phone customers during the quarter, and it lost another 4,000 prepaid users. But it said it began to grow its customer base again after it introduced an unlimited-data plan in late February, joining the four major mobile network operators.

“As I have said in the past, I’m not a fan of unlimited—not in an industry where additional demand requires more capital,” U.S. Cellular President Ken Meyers said in a post-earnings conference call with analysts. “So we did not immediately react to the early unlimited plans, and that impacted traffic and gross adds. However, we’ve also said that we’re price takers given our position in the industry. So when Verizon moved to offer unlimited plans, we moved also.”

Indeed, the nation’s largest carrier finally launched an unlimited data plan in mid-February, joining its rivals and reversing course after years of decrying the wisdom of offering all-you-can-eat on a high-speed wireless network. The company had been on pace to lose nearly 400,000 customers during the quarter, according to CFO Matt Ellis, but the new stanched the bleeding.

Meyers said U.S. Cellular’s new plan has proven to be similarly compelling.

“It was very well received,” he said of the new plan, which starts at $60 a month for a single line of unlimited data. “In just five weeks, 11% of new and existing postpaid lines had moved to these new plans.”

The earnings report and new guidance encouraged investors, as shares of U.S. Cellular were up more than 5% by mid-Friday.