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U.S. Cellular Reports First Quarter 2011 Results
Posted: 06-May-2011 [Source: U.S. Cellular]

[U.S. Cellular reports a loss of 31,000 retail customers 1Q11.]

Chicago -- 1Q 2011 Highlights

* A net loss of 31,000 retail customers, reflecting a loss of 22,000 postpaid customers and 9,000 prepaid customers; postpaid customers comprised 95 percent of retail customers.

* Service revenues were $985.1 million, up 2.1 percent.

* Postpaid ARPU (average revenue per unit) increased to $51.21 from $50.70.

* Postpaid churn improved to 1.37 percent from 1.41 percent.

* 5 percent increase in cell sites in service to 7,663.

* Repurchased 357,021 common shares for $17.4 million.

United States Cellular Corporation (NYSE:USM - News) reported service revenues of $985.1 million for the first quarter of 2011 versus $965.0 million in the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $34.1 million and $0.40, respectively, for the first quarter of 2011 compared to $47.4 million and $0.54, respectively, in the comparable period one year ago.

"We were pleased to see improvements in postpaid ARPU and churn in the quarter," said president and CEO Mary N. Dillon, "though it's clear from our subscriber results that we need to increase awareness of the unique value and benefits we offer to potential customers. We recently launched new advertising to better communicate our great network and phones and the unique benefits of the Belief Plans. In addition, the recent changes we've made to our senior management team will allow us to leverage the vast strengths and talents of our existing team and bring on additional perspectives as we continue to innovate and delight our customers.

"Smartphone sales were very strong in the quarter, representing 42 percent of all the devices we sold, and data use continued to grow dramatically. Accordingly, we've decided to increase overall data capacity and accelerate our 4G/LTE rollout, to ensure outstanding data experiences for our customers and better manage the related costs. We're also introducing a minimum of 13 new smartphones in 2011 to address the growing demand. Our device lineup will include some lower-priced smartphones with lower associated subsidies.

"We had migrations and additions totaling 1.8 million new and existing customers on our Belief Plans at the end of the quarter, and we're focused very intently on evolving our marketing messaging and sales strategies to put U.S. Cellular at the top of the list for consideration by potential switchers. We have the highest call quality and network satisfaction of any national carrier, and this quarter's very low postpaid churn rate demonstrates how happy our existing customers are with the value and outstanding service they get from U.S. Cellular.

"We continue to move forward with our enablement initiatives to improve efficiencies and cost structure. This spending, along with more smartphone subsidies, is pressuring margins now, but both are expected to have a positive, long-term effect on profitability."

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