Thursday, wireless telephone services provider United States Cellular Corp. (USM) said second quarter earnings increased from a year ago reflecting lower expenses, notwithstanding a year-on-year dip in revenues. The company updated service revenue estimate for the full year.
Net income attributable to U.S. Cellular shareholders rose to $83.4 million or $0.96 per share for the second quarter from $72.6 million or $0.83 per share in the prior year quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.
The Chicago, Illinois-based company's total operating revenues slipped 2% to $1.043 billion from $1.061 billion in the prior year quarter. Revenues fell short of six analysts consensus estimate of $1.06 billion.
John Rooney, president and chief executive officer of U.S. Cellular said, "U.S. Cellular had a net loss in retail customers for the second quarter due to the combined effect of the weak economy and very competitive market conditions. The launch of the latest iPhone and other exclusive handsets was a factor, as was the increased presence and competitiveness of low-priced, prepaid service providers in some of our markets."
Service revenues edged down 1% to $974.76 million in the quarter from $987.35 million one year ago, due to a $22 million reduction in inbound roaming revenues related primarily to the acquisition of Alltel Corp. by Verizon Wireless. Equipment sales revenue decreased 7% to $67.79 million from $73.24 million last year.
The company added that after adjusting for a decline in roaming revenues that resulted from Verizon's acquisition of Alltel, service revenues increased slightly, due to continued growth in demand for data services. In fact, data revenues grew 31% and now represent 17% of service revenues.
Average monthly revenue per unit was $52.41 for the quarter, compared to $53.27 in the prior-year period. Post pay churn rate increased to 1.7% from 1.4% a year ago.
Operating expenses declined 4% to $901.63 million in the quarter from $942.69 million a year ago.
For the first half, net income attributable to U.S. Cellular shareholders grew to $167.95 million or $1.92 per share from $143.16 million or $1.63 per share in the corresponding period last year. The company generated revenue of $2.095 billion, compared to $2.098 billion in the corresponding period a year ago.
U.S. Cellular said it has withdrawn its net retail customer additions guidance for the remainder of 2009 due to uncertainty related to the weak economy and consumer purchasing intentions.
Updating fiscal 2009 revenue guidance, the company said it now expects service revenue in the range of $3.9 billion to $3.95 billion. Analysts are currently looking for $4.19 billion.
USM is trading at $36.33, up $0.64 or 1.79%, on a volume of about 62 thousand shares.
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