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Thread: Interesting Q3 earnings report suggest from US Cellular

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    Interesting Q3 earnings report suggest from US Cellular

    Always interesting to hear and read management try and spin the buzz for USM. Here are some interesting points from the earnings call and filings for Q3 2016:

    1. They lost 6,000 post paid subscribers for the quarter.
    2. They added 67,000 pre paid subscribers for the quarter.
    3. Their ARPU dropped again to $47.08. 1 year ago it was $58.12.
    4. Churn rate is still low but ticked up slightly to 1.34% for post paid and 4.84% for post paid.
    5. They have not registered increase market territory (~32 Mi POP) and claim 16% market share in those areas.
    6. They added 50 towers for the quarter.
    7. They have 5 million "connections" (they do no break out actual customers numbers)
    8. Overall net income for the quarter was 17 million or 73% decline y/o/y.
    9. Overall earnings of .20 cents/share, decline of 73% for y/o/y.
    10. They claim value of spectrum licenses at 1.8 billion and a net zero of assets to liabilities to debt (of which they carry 1.6 billion in long term debt).

    In short summary: they are losing post paid customers again but gaining pre paid (most notably probably because of their inclusion into such services like Google's pre paid service). Their overall revenue per subscriber continues to drop. They are not expanding territories or areas. They have marked 16 million in revenue for Q4 for incoming payment on spectrum sales/swaps. Basically, treading water yet which they seem content with. One has to wonder how long they will do this before being acquired by someone larger.

    Some good news: They have expanded LTE roaming for their customers (notably you can see it is TMobile) and this is adding coverage for their users and significantly cheaper for them cost wise. Additionally they are on-track to turn on VoLTE in 1 major market in early 2017. This will continue to roll out over the year and they expect to see returns on this with the ability to serve all major carriers with LTE and VoLTE roaming capabilities.

    As for those curious on their spectrum sale, they have included this information in their 10-Q. I have not been able to find much in the spectrum database on the transactions however it would appear that some more spectrum swaps and sales are forthcoming.

    Note 5 Acquisitions, Divestitures and Exchanges
    In February 2016, U.S. Cellular entered into an agreement with a third party to exchange certain 700 MHz licenses for certain AWS and PCS licenses and $ 28 million of cash. This license exchange will be accomplished in two closings. The first closing occurred in the second quarter of 2016 at which time U.S. Cellular received $ 13 million of cash and recorded a gain of $ 9 million. The second closing is expected to occur in the fourth quarter of 2016 and U.S. Cellular expects to recognize a gain at that time. As a result of this exchange, the remaining licenses with a carrying value of $ 8 millio n have been classified as “Assets held for sale” in the Consolidated Balance Sheet as of September 30, 2016 .
    In February 2016, U.S. Cellular entered into an additional agreement with a third party that provided for the transfer of certain AWS spectrum licenses and $ 2 million in cash to U.S. Cellular, in exchange for U.S. Cellular transferring certain AWS, PCS and 700 MHz licenses with a carrying value of $ 7 million to the third party. This transaction closed in the third quarter of 2016, at which time U.S. Cellular recorded a gain of $ 7 million.
    In March 2016, U.S. Cellular entered into an additional agreement with a third party to transfer FCC licenses in non-operating markets and receive FCC licenses in operating markets. The agreement provides for the transfer of certain AWS and PCS spectrum licenses to U.S. Cellular in exchange for U.S. Cellular transferring certain PCS spectrum licenses and $ 1 million of cash to the third party. This transaction is subject to regulatory approval and other customary closing conditions, and is expected to close in the fourth quarter of 2016. Upon closing of this transactio n, U.S. Cellular expects to recognize a gain. As a result of this additional exchange agreement, licenses with a carrying value of $ 8 million have been classified as “Assets held for sale” in the Consolidated Balance Sheet as of September 30, 2016 .
    In 2015 and 2016, U.S. Cellular entered into multiple agreements to purchase spectrum licenses located in U.S. Cellular’s existing operating markets. The aggregate purchase price for these spe ctrum licenses is $ 56 million, of which $ 46 million closed in the second quarter of 2016. The remaining agreements are expected to close in the fourth quarter of 2016.
    U.S. Cellular is participating in the FCC’s forward auction of 600 MHz spectrum licenses, referred to as Auction 1002, which commenced in August 2016. In the second quarter of 2016, U.S. Cellular made an upfront payment to the FCC of $ 143 million to establish its initial bidding eligibility.

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    Quote Originally Posted by thxdude21 View Post
    Always interesting to hear and read management try and spin the buzz for USM. Here are some interesting points from the earnings call and filings for Q3 2016:

    1. They lost 6,000 post paid subscribers for the quarter.
    2. They added 67,000 pre paid subscribers for the quarter.
    3. Their ARPU dropped again to $47.08. 1 year ago it was $58.12.
    4. Churn rate is still low but ticked up slightly to 1.34% for post paid and 4.84% for post paid.
    5. They have not registered increase market territory (~32 Mi POP) and claim 16% market share in those areas.
    6. They added 50 towers for the quarter.
    7. They have 5 million "connections" (they do no break out actual customers numbers)
    8. Overall net income for the quarter was 17 million or 73% decline y/o/y.
    9. Overall earnings of .20 cents/share, decline of 73% for y/o/y.
    10. They claim value of spectrum licenses at 1.8 billion and a net zero of assets to liabilities to debt (of which they carry 1.6 billion in long term debt).

    In short summary: they are losing post paid customers again but gaining pre paid (most notably probably because of their inclusion into such services like Google's pre paid service). Their overall revenue per subscriber continues to drop. They are not expanding territories or areas. They have marked 16 million in revenue for Q4 for incoming payment on spectrum sales/swaps. Basically, treading water yet which they seem content with. One has to wonder how long they will do this before being acquired by someone larger.

    Some good news: They have expanded LTE roaming for their customers (notably you can see it is TMobile) and this is adding coverage for their users and significantly cheaper for them cost wise. Additionally they are on-track to turn on VoLTE in 1 major market in early 2017. This will continue to roll out over the year and they expect to see returns on this with the ability to serve all major carriers with LTE and VoLTE roaming capabilities.

    As for those curious on their spectrum sale, they have included this information in their 10-Q. I have not been able to find much in the spectrum database on the transactions however it would appear that some more spectrum swaps and sales are forthcoming.

    Note 5 Acquisitions, Divestitures and Exchanges
    In February 2016, U.S. Cellular entered into an agreement with a third party to exchange certain 700 MHz licenses for certain AWS and PCS licenses and $ 28 million of cash. This license exchange will be accomplished in two closings. The first closing occurred in the second quarter of 2016 at which time U.S. Cellular received $ 13 million of cash and recorded a gain of $ 9 million. The second closing is expected to occur in the fourth quarter of 2016 and U.S. Cellular expects to recognize a gain at that time. As a result of this exchange, the remaining licenses with a carrying value of $ 8 millio n have been classified as “Assets held for sale” in the Consolidated Balance Sheet as of September 30, 2016 .
    In February 2016, U.S. Cellular entered into an additional agreement with a third party that provided for the transfer of certain AWS spectrum licenses and $ 2 million in cash to U.S. Cellular, in exchange for U.S. Cellular transferring certain AWS, PCS and 700 MHz licenses with a carrying value of $ 7 million to the third party. This transaction closed in the third quarter of 2016, at which time U.S. Cellular recorded a gain of $ 7 million.
    In March 2016, U.S. Cellular entered into an additional agreement with a third party to transfer FCC licenses in non-operating markets and receive FCC licenses in operating markets. The agreement provides for the transfer of certain AWS and PCS spectrum licenses to U.S. Cellular in exchange for U.S. Cellular transferring certain PCS spectrum licenses and $ 1 million of cash to the third party. This transaction is subject to regulatory approval and other customary closing conditions, and is expected to close in the fourth quarter of 2016. Upon closing of this transactio n, U.S. Cellular expects to recognize a gain. As a result of this additional exchange agreement, licenses with a carrying value of $ 8 million have been classified as “Assets held for sale” in the Consolidated Balance Sheet as of September 30, 2016 .
    In 2015 and 2016, U.S. Cellular entered into multiple agreements to purchase spectrum licenses located in U.S. Cellular’s existing operating markets. The aggregate purchase price for these spe ctrum licenses is $ 56 million, of which $ 46 million closed in the second quarter of 2016. The remaining agreements are expected to close in the fourth quarter of 2016.
    U.S. Cellular is participating in the FCC’s forward auction of 600 MHz spectrum licenses, referred to as Auction 1002, which commenced in August 2016. In the second quarter of 2016, U.S. Cellular made an upfront payment to the FCC of $ 143 million to establish its initial bidding eligibility.
    Interesting, thanks for posting, thx!

    Sent from my SM-G935V using Tapatalk

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    they need to sell all band 12 to t-mobile and just be done with it.

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    Quote Originally Posted by adrenatek View Post
    they need to sell all band 12 to t-mobile and just be done with it.
    Well, they're using it here in Northwestern California, so I don't think USCC customers here would be too happy They're using Band 5 for LTE as well, but they have no other spectrum than 5 and 12, so the loss of 12 would be a bad thing for our area. T-Mobile also has Band 12 deployed here, so they don't need any.

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