UScellular lost more postpaid customers in the fourth quarter of 2021 – about 12,000 – on top of the 8,000 it lost in the third quarter of 2021. But that wasn’t a big topic during its quarterly conference call on Friday.
Sure, the company is faced with a big switching environment. “We have to continue to do better,” said UScellular President and CEO Laurent Therivel during the call. But its share of gross adds was quite strong last year, particularly in the fourth quarter. “It’s really a churn story,” he said.
“The churn dynamic is going to be affected by the upgrade promotions. We’re going to be launching a new approach to upgrades in the second quarter,” driven by a personalization engine that will do much more targeted digital outreach to customers, he said. That personalization approach should give them similar results as a mass market approach but at a better cost, according to Therivel.
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The plan calls for continued investment in growth areas like prepaid, business and government and towers. And the expectation is the recently passed Infrastructure Investment and Jobs Act (IIJA) will go a long way toward helping meet its goals.
Tower business
UScellular is unique among wireless carriers in that it still owns its towers and while it’s not a huge piece of revenue at this time, it expects that will change.
In fact, Therivel suggested it will be a lot more aggressive on the tower scene, where it will be marketing them to potential co-locators. Long term, the big opportunity is “more towers,” he said. It’s about “building more towers to support our wireless business and putting those towers in place to improve our expense profile,” whether it’s moving out of high rent areas, reducing its roaming exposure or improving coverage.
“We’re going to put those towers in places where we also think that we can market them to the AT&Ts, Verizons, T-Mobiles and Dishs of the world,” he said.
A key opportunity is getting funds from the IIJA, which he called a potential game changer, not only for UScellular but for connecting the under-served, particularly in rural America, which is a large part of his company’s territory.
The specific allocations are still being worked out and a lot of it will go to fiber, but fixed wireless is expected to play a big role. UScellular has been encouraged by results from its millimeter wave fixed wireless trials, with nearly 1 Gig speeds across 7 kilometers with line of sight, and it’s commercially launched its mmWave product, he said.
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The challenges in tower economics are tied to denser coverage, and the IIAJ can provide funding to make the economics work, he said. It’s a lot cheaper to run fiber to one tower that covers hundreds of homes and businesses than it is to run fiber to each of those individual locations, he noted.
Fixed wireless aspirations
In terms of fixed wireless, UScellular is clearly on that train, as are its bigger rivals in wireless, such as T-Mobile and Verizon, which are aggressively marketing their 5G home broadband services like never before.
“We’re rolling out that fixed wireless service without infrastructure subsidies,” Therivel said. “We’re doing so steadily, gradually. We’ve got the service live in market in a couple of states. You can expect to kind of see some gradual expansion there.”
The thing that’s “going to put it on steroids” and make a meaningful difference in the financials is “taking advantage of those infrastructure dollars,” he added.
As for the timing of those dollars from the government, he expects it will be later this year when better maps will be available. “My expectation is that we’ll start to see meaningful grants flowing from the states in 2023,” so 2022 will be a foundational year in terms of building the business and 2023 will be about taking advantage of those dollars and “hitting the growth lever.”
For UScellular, it’s looking at a service that offers 300 Mbps down and north of 100 Mbps up. But how that market sizes up in the states will be determined in large part by how many dollars go to fiber and how many are allocated to alternate technologies.
Here are some financials from its fourth quarter 2021 results:
- Postpaid ARPU was $48.62. Postpaid churn for handsets was 1.10%; churn for connected devices was 3.08%, reflecting a decrease in hot spot activity compared with the start of the pandemic when a lot of consumers were shopping for hot spots.
- UScellular lost 5,000 prepaid customers in the quarter. Prepaid churn was 4.39%.
- UScellular service revenue was $782 million, which was better than Wall Street analyst estimates of $778 million.