United States Cellular Corp. USM – a subsidiary of Telephone & Data Systems Inc. TDS – posted mixed financial results in the first quarter of 2017. While the top line missed the Zacks Consensus Estimate, the bottom line surpassed the mark.
GAAP net income came in at $26 million or 31 cents per share compared with a net income of $9 million or 10 cents per share in the year-ago quarter. Quarterly adjusted earnings per share of 18 cents were well above the Zacks Consensus Estimate of 11 cents per share.
Quarterly total revenue of $936 million was down 3% year over year missing the Zacks Consensus Estimate of $958.9 million. Quarterly Service revenues decreased 3% to $746 million. Revenues from Equipment sales dropped 4% to $190 million.
Quarterly operating expenses decreased 8% to $882 million. Operating income was $54 million compared with $10 million in the prior-year quarter. Total cell sites in service were 6,417 compared with 6,415 at the end of 2016. Total company owned towers were 4,041 compared with 4,040 at the end of 2016.
Cash Flow
In the quarter under review, cash from operations came in at $61 million compared with $163 million in the prior-year quarter. Quarterly free cash flow was a negative $27 million compared with a positive $60 million in the year-ago quarter.
Liquidity
United States Cellular exited the first quarter of 2017 with cash and cash equivalents of $572 million compared with $586 million at the end of 2016. At the end of the reported quarter, total debt was $1,627 million compared with $1,629 million at the end of 2016. The debt-to-capitalization ratio at the end of first-quarter 2017 was 0.30 compared with 0.31 at 2016-end.
ARPU & Churn
Quarterly postpaid ARPU (average revenue per user) increased to $45.42 from $45.19 at the end of 2016. Postpaid ARPA (average revenue per account) was $121.88 as against $120.67 at the end of 2016. Postpaid churn declined to 1.29% from 1.41% recorded at the end of 2016. Prepaid ARPU increased to $33.66 from $33.25 recorded at the end of 2016. Prepaid churn increased to 5.69% in the reported quarter from 5.44% at 2016-end.
Subscriber Statistics
United States Cellular exited the first quarter of 2017 with a subscriber base of 4,996,000 compared with 5,031,000 at the end of 2016. Postpaid subscriber base totaled 4,455,000 compared with 4,482,000 at 2016-end. Meanwhile, prepaid subscriber base totaled 480,000 compared with 484,000 at the end of 2016. In the reported quarter, United States Cellular lost a net of 27,000 postpaid subscribers compared with the addition of 45,000 customers in the year-ago quarter. The company lost 4,000 prepaid customers in the same quarter as opposed to a net gain of 12,000 users in the prior-year quarter.