Exhibit 99.1
Contact: | Kenneth R. Meyers, Executive Vice President, Finance, U.S. Cellular |
| (773) 399-8900 kmeyers@uscellular.com |
| |
| Mark A. Steinkrauss, Vice President, Corporate Relations, TDS |
| (312) 592-5384 mark.steinkrauss@teldta.com |
FOR RELEASE: IMMEDIATE
U.S. CELLULAR REPORTS SECOND QUARTER 2006 RESULTS
CHICAGO — Oct. 10, 2006 - United States Cellular Corporation [AMEX:USM] reported service revenues of $791.3 million for the second quarter of 2006, up 14 percent from $691.7 million, as restated, for the comparable period one year ago. The company recorded operating income of $79.6 million during the quarter, up 19 percent compared to $66.9 million for the second quarter of 2005, as restated. Net income and diluted earnings per share were $51.1 million and $0.58, respectively, compared to net income and diluted earnings per share of $38.1 million and $0.44, respectively, as restated, for the comparable period one year ago.
Second Quarter Highlights
· The total number of U.S. Cellular customers increased 9 percent year over year to 5,704,000. The number of retail customers increased 9 percent to 5,099,000.
· U.S. Cellular’s average monthly revenue per customer increased 4.5 percent to $46.52.
· U.S. Cellular recorded a postpay churn rate of 1.5 percent.
“Outstanding customer service remains at the heart of U.S. Cellular’s business strategy,” said John E. Rooney, U.S. Cellular’s president and chief executive officer. “This intense focus on customer satisfaction drove improved profitability, with services revenues up 14 percent, operating income up 19 percent and net income up 34 percent, compared to the second quarter of 2005. U.S. Cellular will continue to focus on profitable growth in its existing markets and does not plan to launch any significant new markets during the remainder of 2006 or 2007.”
“As part of our commitment to outstanding service, we invest heavily in our high-quality network that customers can rely on 24 hours per day, 365 days per year,” continued Rooney. “Over the past twelve months, we increased our number of cell sites by 549 or 11 percent, while still controlling network costs—system operations expense rose by only 2 percent, year over year.”
Rooney concluded, “Our customers recognize and appreciate our commitment to outstanding service, particularly our postpay customers who benefit the most. This was amply demonstrated by the 1.5 percent postpay churn rate for the quarter and first half of the year.”
“With the filing of our second quarter Form 10-Q later today, we will be current with our SEC filings and compliant with American Stock Exchange listing standards,” said Kenneth R. Meyers, U.S. Cellular’s executive vice president of finance and chief financial officer. “The delay in our filings was unfortunate, but it was necessary to ensure the accuracy, completeness and transparency of our financial reporting. We remain committed to these goals.”
U.S. Cellular updated its 2006 guidance as of Oct. 10, 2006 and it is as follows. There can be no assurance that final results will not differ materially from this guidance.
Net Retail Customer Additions | 330,000 — 360,000 |
Service Revenues | Approx. $3.2 billion |
Operating Income | $275 — 325 million |
Depreciation, Amortization & Accretion | Approx. $575 million |
Capital Expenditures | $580 - $610 million |
Certain financial and statistical information will be posted to the U.S. Cellular web site, together with reconciliations to generally accepted accounting principles (GAAP) of certain non-GAAP disclosures. Investors may access this additional information on the Investor Relations section of the U.S. Cellular web site.
About U.S. Cellular
As of June 30, 2006, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, provided wireless service to 5.7 million customers in 26 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support, and a high-quality network.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: The ability of the company to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in competition in the markets in which the company operates; changes in the overall economy; changes due to industry consolidation; advances in telecommunications technology; changes in the telecommunications regulatory environment; changes in the value of assets; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded our debt securities by accredited ratings organizations; possible future restatements; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming rates and the mix of products and services offered in the company’s markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.
For more information about U.S. Cellular, visit: www.uscellular.com.
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UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | |
| | | | | | | | | | | |
Consolidated Markets: | | | | | | | | | | | |
Total population (000s) (1) | | 55,543 | | 55,164 | | 45,244 | | 44,690 | | 44,690 | |
All customers - | | | | | | | | | | | |
Customer units | | 5,704,000 | | 5,633,000 | | 5,482,000 | | 5,303,000 | | 5,227,000 | |
Gross customer unit activations | | 347,000 | | 434,000 | | 419,000 | | 355,000 | | 340,000 | |
Net customer unit activations | | 48,000 | | 151,000 | | 125,000 | | 76,000 | | 94,000 | |
Market penetration (1) | | 10.27 | % | 10.21 | % | 12.12 | % | 11.87 | % | 11.70 | % |
Retail customers - | | | | | | | | | | | |
Customer units | | 5,099,000 | | 5,029,000 | | 4,927,000 | | 4,765,000 | | 4,688,000 | |
Gross customer unit activations | | 332,000 | | 380,000 | | 392,000 | | 346,000 | | 317,000 | |
Net customer unit activations | | 50,000 | | 122,000 | | 130,000 | | 77,000 | | 81,000 | |
| | | | | | | | | | | |
Cell sites in service | | 5,583 | | 5,438 | | 5,428 | | 5,149 | | 5,034 | |
Average monthly revenue per unit (2) | | $ | 46.52 | | $ | 46.22 | | $ | 45.94 | | $ | 46.19 | | $ | 44.52 | |
Retail service revenue per unit (2) | | $ | 40.82 | | $ | 40.75 | | $ | 40.19 | | $ | 40.25 | | $ | 39.40 | |
Inbound roaming revenue per unit (2) | | $ | 2.28 | | $ | 2.12 | | $ | 2.31 | | $ | 2.70 | | $ | 2.27 | |
Long-distance/other revenue per unit (2) | | $ | 3.42 | | $ | 3.35 | | $ | 3.44 | | $ | 3.24 | | $ | 2.85 | |
Minutes of use (MOU) (3) | | 719 | | 658 | | 648 | | 639 | | 627 | |
Postpay churn rate per month (4) | | 1.5 | % | 1.5 | % | 1.6 | % | 1.5 | % | 1.4 | % |
Marketing cost per gross customer unit addition (5) | | $ | 503 | | $ | 412 | | $ | 498 | | $ | 491 | | $ | 461 | |
Construction Expenditures (000s) | | $ | 153,400 | | $ | 119,800 | | $ | 201,700 | | $ | 128,300 | | $ | 143,800 | |
(1) Market penetration is calculated using 2005 Claritas population estimates for all periods of 2006 and 2004 Claritas estimates for all periods of 2005. “Total population” represents the total population of each of U.S. Cellular’s consolidated markets, regardless of whether the market has begun marketing operations. The 6/30/06 and 3/31/06 total population count includes the markets acquired in January 2006 by Carroll Wireless, L.P., a consolidated U.S. Cellular subsidiary, representing the licensed areas for which Carroll Wireless L.P. was the winning bidder in the Federal Communications Commission’s Auction 58 that concluded in February 2005. The 6/30/06, 3/31/06 and 12/31/05 total population counts include the the population of the 15 markets acquired from ALLTEL in December 2005, and exclude the population of the two markets transferred to ALLTEL in the same transaction. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period.
(2) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:
Service Revenues per Financial Highlights | | $ | 791,272 | | $ | 770,082 | | $ | 738,682 | | $ | 729,504 | | $ | 691,746 | |
Components: | | | | | | | | | | | |
Retail service revenue during quarter | | $ | 694,279 | | $ | 678,970 | | $ | 646,178 | | $ | 635,610 | | $ | 612,159 | |
Inbound roaming revenue during quarter | | $ | 38,745 | | $ | 35,344 | | $ | 37,184 | | $ | 42,654 | | $ | 35,313 | |
Long-distance/other revenue during quarter | | $ | 58,248 | | $ | 55,768 | | $ | 55,320 | | $ | 51,240 | | $ | 44,274 | |
| | | | | | | | | | | |
Divided by average customers during quarter (000s) | | 5,670 | | 5,554 | | 5,360 | | 5,264 | | 5,179 | |
Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | |
Average monthly revenue per unit | | $ | 46.52 | | $ | 46.22 | | $ | 45.94 | | $ | 46.19 | | $ | 44.52 | |
Retail service revenue per unit | | $ | 40.82 | | $ | 40.75 | | $ | 40.19 | | $ | 40.25 | | $ | 39.40 | |
Inbound roaming revenue per unit | | $ | 2.28 | | $ | 2.12 | | $ | 2.31 | | $ | 2.70 | | $ | 2.27 | |
Long-distance/other revenue per unit | | $ | 3.42 | | $ | 3.35 | | $ | 3.44 | | $ | 3.24 | | $ | 2.85 | |
(3) Average monthly local minutes of use per customer (without roaming).
(4) Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5) This measurement is not calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular’s web site, along with additional information related to U.S. Cellular’s second quarter results, at www.uscellular.com.
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