(RTTNews) - Thursday, wireless telephone service provider United States Cellular Corp. (USM: News ) reported a sharp fall in third quarter earnings, essentially due to lower revenues and increased expenses. The company also backed its services revenue estimate for fiscal 2009.

The Chicago, Illinois-based U.S. Cellular's third-quarter net income attributable to the company plunged to $35.64 million or $0.41 per share from $89.949 million or $1.02 per share a year ago. On average, seven analysts polled by Thomson Reuters expected the company to report a profit of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.

In the year-ago quarter, results included a $16.4 million pre-tax gain on disposition of investments related to Rural Cellular Corporation.

Total operating revenues edged down 3% to $1.058 billion from $1.092 billion last year. Analysts expected revenue of $1.04 billion for the quarter.

Services revenue increased to $984.92 million for the quarter, up from $974.75 million a year ago, while equipments sales dipped to $73.38 million from $77.95 million a year ago.

The company said revenues decreased year-on-year due to a $24.7 million reduction in inbound roaming revenues related to the acquisition of Alltel Corporation by Verizon Wireless.

The company noted that postpay churn was 1.7 percent and postpay customers comprised 96% of retail customers.
John Rooney, U.S. Cellular president and chief executive officer said, "As expected, operating income declined this quarter, reflecting lower revenues, as well as increased spending in support of multi-year initiatives."

Total operating expenses increased to $1.001 billion for the quarter from $971.92 million a year ago.

Year-to-date, U.S. Cellular's net income declined to $203.58 million or $2.33 per share from $233.11 million or $2.65 per share in the corresponding period last year. Total revenues decreased 1% to $3.154 billion from $3.190 billion in the previous year.

Backing its prior guidance, the company said it expects for fiscal 2009, services revenues in the range of $3.900 billion - $3.950 billion and operating income between $300 million and $375 million. Analysts currently expect earnings of $2.86 on revenues of $4.17 billion for the year.

USM is trading at $38.31, up $0.46 or 1.22%, on a volume of about 110 thousand shares.

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by RTT Staff Writer

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