Towers proved to be a highlight in UScellular’s (NYSE: USM) first-quarter 2025 results. Third-party tower rental revenues increased by six percent year-over-year. Combined with intracompany revenues, total tower revenues grew five percent YoY to $61 million. According to Laurent Therivel, UScellular President and CEO, the revenue growth is coming not just from annual lease escalators but also “ramping from colocation and new amendment activity and new colocation activity” all of which is driving increased sales volumes.
At the end of the quarter, the company owned 4,413 towers and had 2,469 colocations, with UScellular as the anchor tenant, resulting in a tower tenancy ratio of 1.56. T-Mobile (NASDAQ: TMUS) was the largest tower tenant, accounting for 34 percent of tower revenue in Q1. Verizon (NYSE: VZ) and AT&T (NYSE: T) followed with 27 percent and 25 percent, respectively. Other wireless service providers contributed the remaining 14 percent of revenues.
UScellular struggles to compete with national MNOs and cable companies in its operating territory, losing 39,000 postpaid and 17,000 prepaid phone subscribers in the quarter. Consequently, its subscriber base fell two percent YoY to 4.4 million.
The company reported further financial declines with a shrinking customer base. Operating revenues for 1Q25 were $891 million, down from $950 million in 1Q24. Wireless service revenues fell to $741 million from $754 million. Adjusted EBITDA dropped to $254 million from $272 million. However, UScellular’s fixed wireless access business grew, reaching 150,000 subscribers, a 21 percent YoY increase.
In May 2024, UScellular and its parent company, Telephone and Data Systems (NYSE: TDS), agreed to sell their wireless operations to T-Mobile, Inside Towers reported. The outcome of the deal, and final sale price, is dependent on UScellular’s performance in achieving certain KPIs before the transaction closes by mid-2025, subject to regulatory approvals and standard closing conditions.
After the T-Mobile acquisition closes, UScellular will continue to operate as a public company. The company said, “we will have a strong business in place at UScellular with the Towers and the Partnerships, both providing predictable cash flows and attractive margins and attractive growth.” UScellular Towers will operate as a REIT and will report key operating metrics such as AFFO. The company acknowledged there may be some potential decommissioning of idle towers once Towers is in standalone mode.
For now, UScellular continues deploying its 5G mid-band network, enhancing speed and capacity for mobile and fixed wireless customers. Citing operating efficiencies, the company reported capital expenditures of $53 million, a 60 percent drop from $131 million in 1Q24.
“In the first quarter, we continued to work towards executing on our 2025 priorities which include successfully closing on the previously announced sale of the wireless business, while remaining focused on investing in a strong customer experience and operating our business efficiently,” said Therivel.
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