UScellular continues to lose mobile customers amid sell-off

UScellular says FWA customer base saw growth, a bright spot in its results

UScellular reported a continued downward slide in its total operating revenues, service revenues and net income, as it proceeds with selling assets and shifting its business into being a telecom infrastructure provider rather than a mobile network operator.

The company reported total operating revenues of $922 million for the third quarter of 2024, compared to $963 million in the year-ago period; service revenues that dropped from $762 million in 2023’s Q3 to $747 million in 2024’s Q3; and a net loss for the third quarter of $79 million, down from a profit of $23 million during the same time last year.

The results also included a $136 million spectrum license impairment related to its high-band spectrum at 28 GHz, 37 GHz and 39 GHz.

There were a few bright spots, however. The company’s Fixed Wireless Access (FWA) customer base continues to grow, up 32% year-over-year to 140,000. Its postpaid ARPU grew by 2%, although its service revenues did see an overall 2% decrease. UScellular said that its postpaid handset net losses improved, its prepaid net additions were up and that its churn rate for both prepaid and postpaid customers also improved (retail subscriber net losses improved by about 20,000)—enough that the company raised some of its guidance for the full year.

“Postpaid handset results improved year-over-year due to our promotional and retention actions,” said UScellular President and CEO Laurent Therivel in a statement. “While overall postpaid handset net adds remained negative, I am pleased with our improving subscriber trajectory.” He added: “Given that our network investments over the past few years have resulted in strong 5G coverage in our footprint, future network investments are expected to predominately focus on the deployment of our mid-band spectrum to enhance speed and capacity. Additionally, I am very pleased that we recently announced agreements with multiple mobile network operators for the sale of portions of our retained spectrum licenses in exchange for proceeds of $1 billion. These transactions are part of our objective to opportunistically monetize the spectrum not included in the proposed T-Mobile transaction.”

He told analysts on the company’s quarterly call that UScellular believes that the proposed sale of its wireless operations to T-Mobile US is on track to close in mid-2025. “We remain confident that the transaction with T-Mobile is the best long-term solution for our customers as it gives them the long-term benefits of greater scale and a more competitive network,” Therivel said.

T-Mobile US plans to buy about 30% of UScellular’s spectrum, plus its wireless subscribers, operations and network assets except for the company’s owned towers for about $4.4 billion. UScellular will retain the nearly 4,400 towers that it owns, as well as about 70% of its spectrum and its equity method investments including its wireless partnerships, which the company said generated about $158 million in income last year.

UScellular is the fifth largest tower company in the United States, and this deal would solidify that position. The two companies said that they are going to put together a new, 15-year master lease agreement under which T-Mo will become a long-term tenant on at least 2,600 of UScellular’s towers, guaranteeing the company an income stream for years to come. T-Mobile US is already a tenant on about 600 of UScellular’s towers, and it will become a tenant on at least another 2,105 sites after the deal.

Separately, UScellular struck another deal with Verizon to sell some of its remaining spectrum for about $1 billion. The mobile network operator has also said that it has made deals with two other unnamed MNOs for the sale of other spectrum, as part of its efforts to “opportunistically monetize” the spectrum that was not included in the proposed sale to T-Mobile US.

The spectrum deal with Verizon would involve the national carrier buying 663 million megahertz POPs of UScellular’s 850 MHz spectrum licenses, as well as 19 million MHz POPs of its PCS licenses and 11 million MHz POPs of its AWS airwaves, for a total consideration of $1 billion.

T-Mobile US, meanwhile, will pick up the majority of UScellular’s 700 MHz A block, AWS and PCS airwaves plus all of USM’s 600 MHz, 2.5 GHz and 24 GHz spectrum, if the acquisition transaction is approved.