U.S. Cellular continued to lose subscribers in the fourth quarter, but was upbeat about its prospects for 2011, particularly for smartphone adoption.
The regional carrier, which operates in 26 states, reported a slight uptick in net profit, up to $6.8 million from $6.6 million in the year-ago quarter. U.S. Cellular CEO Mary Dillon said the company was pleased with its quarterly performance but acknowledged that the company is falling to competitive pressure.
Dillon said U.S. Cellular ended 2010 with 1.2 million new and existing subscribers using its new Belief Project plans, which offer reduced overage charges, earlier phone upgrades, paperless billing discounts and free accessories. Further, during the quarter 40 percent of the company's device sales were smartphones, which U.S. Cellular acknowledged was a drag on short-term profitability but should lead to long-term revenue growth. Only 17 percent of the company's subscriber base has smartphones, and Dillon argued there is room to grow smartphone penetration in 2011.
To that end, this week U.S. Cellular launched a new promotion through March 10 that allows customers who buy a Samsung Mesmerize (a Galaxy S Android device) for $99.99 to get up to five free LG Optimus U smartphones.
Here is a breakdown of some of U.S. Cellular's quarterly metrics:
Subscribers: U.S. Cellular lost 31,000 net subscribers in the fourth quarter, compared with net subscriber additions of 10,000 in the year-ago period. Among those losses were 21,000 net retail subscriber losses. U.S. Cellular ended the year with 6.07 million total subscribers, down from the 6.14 million subscribers it had at the end of 2009.
Financials: The company reported total revenue of $1.063 billion in the quarter, up slightly from the year-ago quarter. Total service revenues clocked in at $992 million, up from $985.4 million in the year-ago period. For the full year, the company reported service revenue of $3.91 billion, below the $3.92 billion it had in 2009. Earlier this month, U.S. Cellular warned that expected its full-year service revenues to fall below expectations due to a series of promotions it enacted to try and lure customers.
Churn: Retail postpaid churn was 1.5 percent, down from 1.6 percent in the fourth quarter of 2009.
ARPU: Average revenue per user increased to $47.41 from $47.07 in the year-ago quarter.
- see this U.S. Cellular earnings release
- see this U.S. Cellular Android release
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