U.S. Cellular(USM) - 2024 Q4 - Annual Report

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$3,667 million, down from $3,805 million in 2023, and decreased by 7$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$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$3,770 million compared to $3,906 million in 2023, and decreased by 6$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].