At the end of the TDS/UScellular earnings call today, one investor summed up the situation from his perspective as someone who has held shares in the company for 32 years.
He purchased the stock at $14.34 and said he’s lost half of his investment. He’s listened to executives talk with enthusiasm about future results that don’t seem to come, and he wonders: Why not put the business up for sale and have someone else manage the assets? The stock is at a 32-year low, he said.
UScellular President and CEO Laurent Therivel answered that he appreciates the shareholder’s loyalty and they’ve been asked those same type of questions before. Bottom line: “We believe in this business” and its long-term future, he said.
The wireless industry as a whole is an interesting place right now, with a lot invested in 5G. The use cases have been slow to manifest and that’s created capital intensity pressures that have affected not just UScellular but competitors, he said.
“I believe we have a very strong set of assets in this business,” with strong spectrum holdings, Therivel said, adding that the overall balance sheet has improved in the last few years. “I understand your frustration. I share it,” he said, adding that UScellular is well positioned to take advantage of the anticipated growth and they’re staying the course because they believe in their strategy.
Layoffs, but how many?
Unfortunately, part of that strategy involves layoffs. Earlier in the call, Therivel said the company announced a reduction in staff this week spanning numerous areas of operation.
A UScellular spokesman said the company is not disclosing how many people are affected.
In a statement, UScellular said these actions were taken to help it navigate a highly competitive environment and meet its long-term growth goals.
The company lost 24,000 postpaid customers in the quarter, which was better than the losses of 44,000 in the year-ago quarter. Churn has improved, to 1.27% versus 1.30% a year ago and 1.35% in the previous quarter. The company ended Q1 2023 with a total of 4,223,000 postpaid customers.
ARPU for the quarter was $50.66 compared to $50.60 in the previous quarter and $49.71 in the year-ago quarter.
In the prepaid division, net losses were 23,000 in Q1 2023. That compares with 18,000 losses in the year ago period. Prepaid churn was 4.63%.
During the quarter, UScellular rolled out its “Built for Us,” or “phones down for 5,” which challenges people to take a break from their phone for five days, five hours or even five minutes to reset their relationship with technology. The response has been “very encouraging,” Therivel said, with improved Net Promoter Scores.
UScellular reported total operating revenues of $986 million for the first quarter of 2023. Service revenues totaled $767 million, versus $787 million for the same period one year ago. Net income was $13 million compared to $49 million in the same period one year ago.
On the network side, about 80% of UScellular’s traffic is traveling over towers that are upgraded to 5G. It’s beginning to light up markets with the 3.45 GHz spectrum, and it will start lighting up C-band in late 2023.
Like some of its bigger wireless carrier rivals, fixed wireless access (FWA) was a bright spot for UScellular. Gross adds were up 130%, and it finished the quarter with 87,000 subscribers; it expects to reach 100,000 subscribers later this year.
Those customers are on UScellular’s low-band spectrum, so as it begins to roll out 3.45 GHz mid-band and, at the end of this year, C-band spectrum, it will be able to offer a better customer experience.
UScellular's rollout of FWA is a little bit different from competitors in that it's focusing more on rural areas and rural customers, Therivel said. Right now, its low-band product competes with satellite and DSL. When it rolls out mid-band FWA, it will be competing not only with those technologies but with cable. The one place UScellular does not view the FWA product as being particularly competitive against is where there's existing fiber, he said.