Core Insights - U.S. Cellular Corporation (USM) reported strong fourth-quarter 2024 results, with both revenue and net income exceeding Zacks Consensus Estimates despite a year-over-year revenue decline due to reduced retail connections [1][4]. Financial Performance - The company generated $970 million in operating revenues, down from $1 billion in the prior-year quarter, but surpassed the Zacks Consensus Estimate of $945 million [4]. - Net income for the quarter was $5 million (5 cents per share), compared to $14 million (16 cents per share) in the same quarter last year, beating the Zacks Consensus Estimate by 15 cents [3]. - For the full year 2024, total revenues were reported at $3.77 billion, a decrease from $3.906 billion in 2023 [4]. Revenue Breakdown - Service revenues decreased to $742 million from $755 million year-over-year, exceeding the Zacks Consensus Estimate of $726.4 million [5]. - Equipment sales generated $228 million, down from $245 million in the prior-year quarter [5]. Customer Metrics - Fixed wireless customers increased by 27% year-over-year to 145,000, contributing positively to revenue [6]. - Total postpaid connections fell to 3,985,000 from 4,106,000 year-over-year, while total prepaid connections decreased slightly to 448,000 from 451,000 [7]. Churn and ARPU - The postpaid churn rate improved to 1.29% from 1.44% a year ago, while prepaid churn decreased to 3.70% from 3.87% [8]. - Postpaid average revenue per user (ARPU) rose to $51.73 from $51.61, while prepaid ARPU fell to $30.59 from $32.32 [8]. Operational Metrics - Adjusted EBITDA for the quarter was $208 million, down from $233 million in the prior-year quarter [9]. - Total operating expenses remained stable at $979 million, resulting in an operating loss of $9 million compared to an operating income of $21 million in the previous year [9]. Cash Flow and Liquidity - Cash generated from operating activities in the December quarter was $121 million, down from $148 million year-over-year, while total cash from operations for 2024 was $883 million compared to $866 million in 2023 [10]. - As of December 31, 2024, the company had $144 million in cash and cash equivalents and $2.83 billion in long-term debt, compared to $150 million and $3.04 billion, respectively, at the end of the prior year [11].

United States Cellular (USM) reported $970 million in revenue for the quarter ended December 2024, representing a year-over-year decline of 3%. EPS of $0.05 for the same period compares to $0.16 a year ago.The reported revenue represents a surprise of +2.66% over the Zacks Consensus Estimate of $944.89 million. With the consensus EPS estimate being -$0.10, the EPS surprise was +150.00%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations t ...

United States Cellular (USM) came out with quarterly earnings of $0.05 per share, beating the Zacks Consensus Estimate of a loss of $0.10 per share. This compares to earnings of $0.16 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 150%. A quarter ago, it was expected that this wireless telecommunications service provider would post earnings of $0.18 per share when it actually produced earnings of $0.26, delivering a surprise ...

Financial Performance - UScellular reported a net loss attributable to shareholders of $39 million for the year ended December 31, 2024, which includes a non-cash impairment charge of $136 million related to certain wireless spectrum licenses [161]. - Net income attributable to UScellular shareholders was a loss of $39 million in 2024, compared to a profit of $54 million in 2023, marking a significant decline [165]. - UScellular reported a net loss of $32 million for 2024, compared to a net income of $58 million in 2023 [295]. - Adjusted EBITDA for 2024 was $1,018 million, an increase from $986 million in 2023, reflecting a growth of approximately 3.2% [295]. - Operating revenues decreased to $3,770 million in 2024 from $3,906 million in 2023, representing a decline of about 3.5% [306]. - The loss on impairment of licenses was $136 million in 2024, compared to no impairment in 2023, impacting net income significantly [301]. - UScellular's operating income for 2024 was a loss of $12 million, down from a profit of $139 million in 2023 [306]. - Basic earnings per share attributable to UScellular shareholders was a loss of $0.46 in 2024, compared to a profit of $0.64 in 2023 [306]. - Total equity for UScellular shareholders decreased to $4,577 million in 2024 from $4,626 million in 2023, indicating a decline in shareholder value [312]. Revenue and Connections - The company serves 4.4 million retail connections, comprising 4.0 million postpaid and 0.4 million prepaid connections, and operates in 21 states [153]. - Total retail connections at the end of 2024 were 4,433,000, a decrease from 4,557,000 in 2023, and down from 4,740,000 in 2022 [173]. - Wireless operating revenues declined by 4% in 2024 to $3,667 million, down from $3,805 million in 2023, and decreased by 7% from $4,076 million in 2022 [183]. - Retail service revenues decreased by 2% in 2024 to $2,674 million, down from $2,742 million in 2023, and also decreased by 2% from $2,793 million in 2022 [183]. Strategic Initiatives - UScellular's strategic shift includes the planned sale of its wireless operations to T-Mobile for a purchase price of $4,400 million, which includes $2,000 million in debt assumption and $100 million contingent on financial metrics [155]. - The strategic alternatives review process is ongoing as UScellular seeks to monetize spectrum assets not subject to existing agreements [159]. - UScellular has agreed to sell its wireless operations and select spectrum assets to T-Mobile, with additional agreements to sell spectrum licenses to Verizon and AT&T [279]. Capital Expenditures and Investments - Capital expenditures decreased by 6% in 2024 to $577 million, down from $611 million in 2023, and decreased by 15% from $717 million in 2022 [165]. - UScellular's capital expenditures in 2024 were primarily focused on deploying 5G technology and investing in information technology, with total capital expenditures amounting to $1,179 million [235][248][254]. - Cash paid for additions to property, plant, and equipment was $537 million in 2024, down from $608 million in 2023, reflecting a decrease in capital expenditures [308]. Debt and Financing - The estimated fair value of long-term debt obligations was $2,785 million as of December 31, 2024, compared to $2,611 million in 2023 [289]. - The total long-term debt obligation as of December 31, 2024, was $2,923 million, with a weighted average interest rate of 6.1% [288]. - Long-term debt decreased to $2,837 million in 2024 from $3,044 million in 2023, showing a reduction in leverage [312]. - UScellular had available undrawn borrowing capacity of $748 million as of December 31, 2024, including $300 million from a revolving credit agreement [221]. Operational Metrics - UScellular employs approximately 4,100 associates and owns 4,409 towers, operating 7,010 cell sites [153]. - Total operating revenues decreased by 3% in 2024 to $3,770 million compared to $3,906 million in 2023, and decreased by 6% from $4,169 million in 2022 [165]. - Total operating expenses increased by 3% in 2024 to $156 million, attributed to higher system operations expenses [210]. - The company incurred third-party expenses related to strategic alternatives of $35 million in 2024, compared to $8 million in 2023 [160]. Spectrum and Technology - UScellular has focused on deploying 5G technology, enhancing speed and capacity, with investments expected to continue in mid-band spectrum deployment [158]. - UScellular recorded a $136 million impairment loss on wireless spectrum licenses in the third quarter of 2024, primarily affecting the retained high-band spectrum unit [264]. - The FCC's 5G Fund for Rural America will distribute up to $9 billion over ten years to enhance 5G connectivity in rural areas [272]. - UScellular's wireless spectrum licenses are considered indefinite-lived intangible assets, with no impairment recorded in 2023 [337]. Shareholder Actions - UScellular repurchased 939,999 common shares for $55 million in 2024, with an average cost per share of $58.06 [242]. - The company reported a bad debts expense of $97 million in 2024, a decrease from $104 million in 2023, suggesting improved credit management [308].

Financial Performance - UScellular reported total operating revenues of $970 million for Q4 2024, a decrease of 3% from $1,000 million in Q4 2023[3] - Net income attributable to UScellular shareholders for Q4 2024 was $5 million, down from $14 million in Q4 2023, resulting in diluted earnings per share of $0.05 compared to $0.16[3] - For the full year 2024, total operating revenues were $3,770 million, a decline of 3.5% from $3,906 million in 2023[4] - The net loss attributable to UScellular shareholders for 2024 was $(39) million, with diluted earnings per share of $(0.46), compared to a net income of $54 million and earnings per share of $0.63 in 2023[4] - Adjusted EBITDA for the year ended December 31, 2024, was $1,018 million, an increase of 3% from $986 million in 2023[31] - Cash flows from operating activities for the year ended December 31, 2024, were $883 million, compared to $866 million in 2023, reflecting a slight increase[25] - Basic earnings per share attributable to UScellular shareholders for Q4 2024 were $0.05, down 68% from $0.17 in Q4 2023[23] - Operating income for Q4 2024 was a loss of $9 million, compared to a profit of $21 million in Q4 2023[23] - Adjusted EBITDA (Non-GAAP) fell by 16% to $137 million for the three months ended December 31, 2024, compared to $164 million in 2023[33] - Free cash flow (Non-GAAP) was negative at $(53) million for the three months ended December 31, 2024, compared to $(44) million in 2023[35] - Operating income (GAAP) for Q4 2024 was $18 million, down from $21 million in Q4 2023, with full year operating income slightly increasing to $78 million from $77 million[41] Customer Metrics - Fixed wireless customers grew by 27% year-over-year, indicating a positive trend in customer acquisition despite overall subscriber losses[8] - Postpaid and prepaid churn rates improved, with postpaid churn at 1.29% and prepaid churn at 3.70%[20] Capital Expenditures - Capital expenditures for Q4 2024 were $162 million, up from $148 million in Q4 2023, supporting ongoing network enhancements[20] - Capital expenditures for the year ended December 31, 2024, totaled $577 million, a decrease of 6% from $611 million in 2023[31] - Capital expenditures increased by 21% to $154 million for the three months ended December 31, 2024, compared to $127 million in 2023[33] Asset and Liability Management - Total assets as of December 31, 2024, were $10,449 million, down from $10,750 million in 2023[27] - Total current liabilities as of December 31, 2024, were $884 million, a decrease from $901 million in 2023[29] Impairment and Losses - The company reported a loss on impairment of licenses amounting to $136 million for the year ended December 31, 2024[25] - The company reported a loss on impairment of licenses amounting to $136 million for the year ended December 31, 2024[37] Shareholder Returns - UScellular repurchased 939,999 common shares for $55 million during 2024, reflecting a commitment to returning value to shareholders[13] Future Outlook - UScellular did not provide financial guidance for 2025 due to the pending transaction with T-Mobile[11] - The company is in the process of closing transactions to sell its wireless operations and select spectrum assets to T-Mobile, expected to finalize in mid-2025[9]

Core Insights - UScellular reported total operating revenues of $970 million for Q4 2024, a decrease of 3% from $1,000 million in Q4 2023 [1][20] - The net income attributable to UScellular shareholders for Q4 2024 was $5 million, down from $14 million in Q4 2023, resulting in diluted earnings per share of $0.05 compared to $0.16 in the prior year [1][28] - For the full year 2024, total operating revenues were $3,770 million, a decline of 3% from $3,906 million in 2023, with a net loss of $39 million compared to a profit of $54 million in 2023 [2][28] Financial Performance - Operating revenues for Q4 2024 included service revenues of $742 million and equipment sales of $228 million, reflecting a 2% and 7% decrease respectively compared to Q4 2023 [20][24] - Operating expenses remained stable at $979 million for Q4 2024, with a notable loss on impairment of licenses recorded at $136 million for the full year [20][26] - Adjusted EBITDA for Q4 2024 was $208 million, down 11% from $233 million in Q4 2023, while full-year adjusted EBITDA increased by 3% to $1,018 million [24][29] Subscriber Metrics - UScellular experienced a net loss of 14,000 postpaid subscribers in Q4 2024, although gross additions improved to 140,000 [16][11] - The churn rate for postpaid subscribers was 1.08% in Q4 2024, slightly improved from 1.22% in Q4 2023 [16][11] - Fixed wireless customers grew by 27% year-over-year, indicating a positive trend in this segment despite overall subscriber losses [11] Strategic Transactions - UScellular announced a significant transaction to sell its wireless operations and select spectrum assets to T-Mobile, expected to close in mid-2025, pending regulatory approval [6][8] - Additional spectrum sales agreements were made with Verizon and AT&T, further indicating a strategic shift in asset management [7][8] - The company did not provide financial guidance for 2025 due to the pending transaction with T-Mobile [8] Shareholder Actions - In 2024, UScellular repurchased 939,999 common shares for $55 million, reflecting a commitment to enhancing shareholder value [9][5] - The company emphasized maintaining strong financial discipline, resulting in solid growth in profitability and free cash flow [5][11]

Core Insights - U.S. Cellular is implementing strategies to enhance subscriber growth and manage churn effectively, focusing on superior network quality and national coverage [1] - The company is expanding its offerings with flat rate plans and unlimited plans to improve average revenue per user while navigating competitive pressures in the U.S. wireless market [1] - The fixed wireless segment is experiencing significant growth, with a 32% year-over-year increase in customers, reaching 140,000 [2] Financial Performance - U.S. Cellular's shares have increased by 54.6% over the past year, outperforming the industry growth of 27.7% [6] - The company has achieved an earnings surprise of 40.45% on average over the last four quarters, indicating strong financial performance [13] - The quick ratio improved to 1.39 in 2024 from 1.33 in 2023, and the current ratio increased to 1.57 from 1.55, suggesting better liquidity management [12] Strategic Initiatives - U.S. Cellular is actively reducing its debt and improving liquidity through monetization of spectrum holdings, including a $4.4 billion agreement with T-Mobile for wireless operations and spectrum assets [11] - The company has also entered into a $1 billion agreement with Verizon Communications to divest a portion of its spectrum holdings [11] - Management's focus on cost optimization is contributing to profitability and positioning the company for future growth [6] Market Position - U.S. Cellular's tower rental business is benefiting from geographical diversity and a balanced presence across major wireless carriers, enhancing its revenue streams [2] - The company is optimistic about the potential of millimeter wave spectrum for fixed wireless access, particularly for rural customers [1]

Core Viewpoint - United States Cellular Corporation has experienced a significant share price increase of nearly 53% in 2024 despite losing approximately 96,000 postpaid device subscriptions [1] Spectrum Strategy - United States Cellular has adopted a unique strategy involving the sale of spectrum assets to major telecom companies, which has contributed to the increase in share value [2][3] - The company has sold billions in spectrum assets to T-Mobile, Verizon, and AT&T, with a notable deal involving T-Mobile expected to close in mid-2025 pending regulatory approval [3][5] Spectrum Asset Value - Spectrum is a finite resource, and the demand for it has led to high auction prices, with over $200 billion in spectrum assets auctioned in the U.S. from 2020 to 2022 [4] - United States Cellular has approximately 30% of its spectrum assets remaining after the T-Mobile deal, with 86% of these being C-Band spectrum, which is considered highly valuable for 5G services [5][6] C-Band Spectrum Pricing - The average price of C-Band spectrum has dropped significantly from a record $0.876/MHz/pop in 2021 to $0.106/MHz/pop, representing an 88% decrease [7] - Based on current prices, the company's C-Band spectrum is valued at around $174 million, down from an estimated $1.4 billion at its peak [7] Future Catalysts - Analysts forecast a 12-month stock price target of $80.00 for United States Cellular, indicating a potential upside of 29.16% [8] - The company may also consider selling its tower assets, which are valued in the billions, as a potential catalyst for share price increases [9] Market Context - Merger enforcement actions have decreased under the Biden Administration, which may impact the regulatory landscape for United States Cellular's deals [9] - Despite a "Buy" rating from analysts, other stocks are currently viewed as better investment opportunities [10][11]

Core Viewpoint - United States Cellular Corporation has entered into an agreement with AT&T to sell a portion of its retained spectrum licenses for $1.018 billion, as part of a strategy to monetize spectrum not included in the proposed sale to T-Mobile [1][2]. Transaction Overview - The agreement involves the sale of 1,250 million MHz-Pops of 3.45 GHz and 331 million MHz-Pops of 700 MHz B/C block licenses for a total of $1.018 billion, payable in cash with potential adjustments [5]. - Following this transaction, UScellular will have monetized approximately 55% of its spectrum holdings (excluding mmWave), totaling around $2.02 billion, and approximately 70% when including the proposed T-Mobile transaction [2]. Spectrum Holdings - After the proposed sales, UScellular will retain 1.86 billion MHz-Pops of low and mid-band spectrum and 17.2 billion MHz-Pops of mmWave spectrum, with a significant portion of retained value in the C-band spectrum [3]. - The C-band licenses are positioned in an attractive mid-band frequency, beneficial for speed and capacity, with a robust 5G ecosystem supporting them [4]. Regulatory and Approval Aspects - The transaction with AT&T is contingent upon the closing of the sale of UScellular's wireless operations and select spectrum assets to T-Mobile, requiring regulatory approvals [6][7]. - TDS, the majority shareholder of UScellular, has provided written consent for the AT&T transaction, eliminating the need for further shareholder action [8]. Company Background - United States Cellular Corporation offers a range of wireless products and services, serving 4.5 million retail connections across 21 states, with 83% ownership by Telephone and Data Systems, Inc. as of September 30, 2024 [10].

Group 1 - Michael Dion is an expert in FP&A, Corporate Finance, and Small Business with 12 years of experience in Fortune 100 companies and various industries including Telecom, Media and Entertainment, Hospitality, and Construction [1] - He founded F9 Finance, a platform aimed at helping finance professionals advance their careers and simplifying finance concepts for better accessibility [1] - Dion's investment strategy focuses on identifying value opportunities where market reactions to news are disproportionate, emphasizing strong fundamentals and a preference for dividend-paying stocks [1] Group 2 - Cash flow is highlighted as a critical factor not only for companies but also for investors at all levels, indicating its importance in investment decisions [1]