Press release·05/02/2025 12:38:43

United States Cellular Corporation’s Q1 2025 Financial Performance

United States Cellular Corporation (UScellular) is a leading regional wireless provider, serving over 4.3 million retail connections across 21 states. In the first quarter of 2025, the company reported mixed financial results, with declines in revenue and profitability compared to the same period last year.

Overview of Financial Performance

For the three months ended March 31, 2025, UScellular reported total operating revenues of $891 million, down 6% from $950 million in Q1 2024. This decline was driven by a 7% drop in wireless service revenues, partially offset by a 5% increase in tower revenues.

Operating expenses decreased 5% to $850 million, leading to operating income of $41 million, down 19% from $51 million in the prior year period. Net income attributable to UScellular shareholders was $18 million, flat compared to Q1 2024.

The company’s Adjusted EBITDA, a non-GAAP measure of profitability, decreased 7% to $254 million, while Adjusted OIBDA, which excludes investment income, fell 6% to $215 million.

Table 1: Key Financial Metrics

Metric	Q1 2025	Q1 2024	% Change
Total Operating Revenues	$891 million	$950 million	-6%
Operating Income	$41 million	$51 million	-19%
Net Income Attributable to UScellular	$18 million	$18 million	0%
Adjusted EBITDA	$254 million	$272 million	-7%
Adjusted OIBDA	$215 million	$228 million	-6%

Wireless Segment Performance

UScellular’s wireless business, which accounts for the majority of its revenues, saw a 7% decline in operating revenues to $864 million. This was driven by a 3% decrease in retail service revenues and a 24% drop in equipment sales.

The company’s postpaid handset net losses improved by 19% compared to Q1 2024, as increased promotional spending helped drive higher gross additions and lower churn. However, postpaid connected device net losses increased due to lower home internet gross additions.

Postpaid ARPU (average revenue per user) and ARPA (average revenue per account) remained relatively flat at $52.06 and $132.25, respectively.

Operating expenses for the wireless segment decreased 6% to $844 million, leading to operating income of $20 million, down 30% year-over-year.

Towers Segment Performance

UScellular’s towers business, which leases tower space to third-party carriers, saw a 5% increase in total revenues to $61 million. This was driven by a 6% rise in third-party revenues, as the number of tower colocations increased by 3%.

Operating expenses for the towers segment increased 11% to $40 million, primarily due to higher selling, general and administrative costs. Operating income for the towers business was $21 million, down 5% from the prior year period.

Liquidity and Capital Expenditures

UScellular maintains a strong liquidity position, with $748 million in available undrawn borrowing capacity from its revolving credit and receivables securitization agreements as of March 31, 2025. The company’s cash and cash equivalents totaled $342 million at the end of the quarter.

Capital expenditures decreased 60% to $53 million in Q1 2025, as the company shifted its 5G deployment focus to enhancing speed and capacity in existing coverage areas rather than expanding the geographic footprint.

Strategic Alternatives Review and Announced Transactions

In August 2023, UScellular’s parent company, Telephone and Data Systems, Inc. (TDS), announced that it would explore strategic alternatives for UScellular. This process led to several significant transactions being announced in 2024:

1. Sale of Wireless Operations and Spectrum to T-Mobile: In May 2024, UScellular agreed to sell its wireless operations and select spectrum assets to T-Mobile for $4.4 billion, subject to adjustments. This transaction is expected to close in mid-2025, pending regulatory approvals.

2. Sale of Spectrum Licenses to Verizon and AT&T: In October and November 2024, UScellular agreed to sell certain wireless spectrum licenses to Verizon and AT&T for a combined $2.018 billion. These transactions are contingent on the closing of the T-Mobile deal.

UScellular expects the closing of these transactions to trigger or accelerate the recognition of various cash and non-cash obligations, including advisory fees, employee compensation, debt extinguishment, and decommissioning costs for certain towers. These costs are expected to have a significant impact on the company’s financial statements in the periods following the close of the T-Mobile transaction.

Outlook and Challenges

UScellular faces several key challenges that have impacted its financial performance and are expected to continue to do so in the future:

1. Competitive Pressures: The wireless industry remains highly competitive, with aggressive pricing and promotional activity by both traditional carriers and cable companies. This has put pressure on UScellular’s revenues and profitability.

2. Lack of Scale: As a regional player, UScellular lacks the scale and cost advantages of larger national carriers, which has made it difficult to compete effectively.

3. Regulatory Uncertainty: UScellular relies on regulatory support and is subject to various surcharges and fees from the government. Changes in these regulatory factors could have a significant impact on the company’s financial results.

4. Technology Advancements: Rapid changes in wireless technology, such as the deployment of 5G, require substantial investments by UScellular to maintain a competitive network. Failure to keep up with these advancements could put the company at a disadvantage.

Despite these challenges, UScellular remains focused on enhancing its network capabilities, expanding its business solutions for enterprise and government customers, and exploring opportunities to monetize its spectrum assets. The company’s strategic alternatives review process, including the announced transactions with T-Mobile, Verizon, and AT&T, could provide substantial financial resources to support these initiatives and potentially return capital to shareholders.

However, the successful completion of these transactions and the long-term viability of UScellular’s remaining business operations are subject to significant uncertainty. Investors and stakeholders will need to closely monitor the company’s progress in navigating these complex strategic and operational challenges in the quarters and years ahead.