It’s been quite a year for UScellular (NYSE: USM), thus far. First, the company agreed to a deal to sell its wireless operations, customers and a portion of its spectrum holdings to T-Mobile (NASDAQ: TMUS). Then the company monetized a portion of its remaining spectrum holdings with sales to Verizon (NYSE: VZ) and two smaller unidentified mobile network operators for a total of roughly $1 billion, Inside Towers reported. These deals are expected to close in early to mid-2025.
In the meantime, the company is carrying on with its commercial wireless business, upgrading its 5G network while serving existing residential and business customers and trying to attract new subscribers in the process. Since its owned towers were not part of the T-Mobile deal, UScellular acknowledges that it is now grooming its operations to be a functioning and competitive tower company after the T-Mobile deal closes.
UScellular, as a regional MNO that operates mainly in Tier 2/3 and rural markets across 21 states, has struggled to hold on to customers and remain competitive against national MNOs and cable companies in its territory. The company covers 32.6 million people but has a penetration rate of only 15 percent. Its inability to compete effectively is one of the company’s biggest arguments as to why the T-Mobile acquisition should be approved.
At the end of 3Q24, UScellular reported 4,451,000 retail postpaid and prepaid subscribers. That figure is down four percent on a year-to-year basis from 4,621,000 at the end of 3Q23. For the quarter, the company had 28,000 postpaid net losses, an improvement of 10,000 from the 38,000 net losses in 3Q23.
As a consequence, 3Q24 wireless service revenues in the quarter of $721 million were down two percent YoY. Nonetheless, the company controlled its costs during the quarter such that Adjusted OIBDA ticked up one percent YoY to $191 million.
The company now reports its tower business performance in a separate category from its wireless operations. With new construction during the quarter, the company reported 4,407 towers in service at the end of 3Q24. UScellular, the MNO, is the tower operations anchor tenant. In addition, its towers support colocations of cell sites through master lease agreements with AT&T (NYSE: T), Verizon and T-Mobile along with several regional carriers. Its tenancy ratio is 1.55.
Total tower revenues in the quarter, including third-party revenues and intra-company revenues, were $59 million, up two percent YoY. Tower Adjusted OIBDA came in at $31 million, a three percent YoY increase.
Capital expenditures for the quarter were $120 million, up 11 percent YoY and included $6 million in tower capex. The company says that its 5G network now covers 80 percent of the population in its operating territory with low band 700 MHz spectrum. UScellular expects an uptick in construction activity in 2025 as it plans to deploy its licenses for 5G mid-band 3.45 GHz and C-band spectrum.
UScellular modified its full-year 2024 guidance, suggesting the key metrics likely will come in the low end of its guidance range. At the midpoint, the company expects service revenues of just under $3 billion versus nearly $3.1 billion in 2023. It expects Adjusted OIBDA of $837 million compared to $818 million and Adjusted EBITDA of $1 billion versus $986 million in 2023. Capital expenditures of $575 million will be down six percent from $611 million in 2023.
By John Celentano, Inside Towers Business Editor
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