U.S. Cellular Outlines Plan To Combat Shrinking Postpaid Base
By Joseph Palenchar On Aug 3 2012 - 2:07pm
Chicago - U.S.
Cellular will expand its distribution options and offer high-demand devices to
reverse the second-quarter decline in its post-paid subscriber base, the
carrier said in announcing second-quarter financial results.
Service revenues were up 3 percent in the
quarter to $1.03 billion, but the carrier's net profits fell to $52.7 million,
down from a year-ago $74.9 million. The company attributed the profit decline
to several factors, including handset subsidy costs that rose with the purchase
of more smartphones. Other factors were with the expansion of its LTE network
and other multiyear initiatives, said president/CEO Mary Dillon.
In the quarter, smartphone sales hit 51.9
percent of devices sold, up from a year-ago 39.6 percent, and the subscriber
base using a smartphone grew to 36.8 percent of subscribers, up from 23.1
percent. 4G LTE devices accounted for 17 percent of smartphones sold during the
The carrier's LTE
footprint reaches 30 percent of consumers in the company's markets and will
expand to reach an expected 58 percent by the end of the year. The company's
network operates in 26 states and has around 5.8 million subscribers.
quarter, Dillon called the company's results "mixed" because a strong 9 percent
gain in gross post-paid subscriber additions was offset by a rising postpaid
churn rate of 1.57 percent to shrink the postpaid subscriber base by 48,000
The carrier attributed the jump in postpaid
gross additions to its recently launched Hello Better marketing campaign, which
encourages competitors' subscribers "to break free from unrewarding provider
relationships," Dillon said. To continue the gross-add growth, "We'll be
utilizing a full range of traditional, social, retail and grassroots tools to
reach out to customers who are unhappy with their current providers and show
them there's a better option with U.S. Cellular," she added.
In prepaid, the company boosted gross
additions by 77 percent, thanks to the launch of U Prepaid service in select
Walmart stores in mid-May. Prepaid churn fell to 6.2 percent, yielding a net
gain of 20,000 prepaid customers.
In other matters, the carrier reported that
postpaid average revenue per user grew 5 percent to $54.42.