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 quarter.
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.
During the 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 customers.
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.