Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- United States Cellular Corp (USM, Financial) improved subscriber results and financials in 2024, despite a competitive environment.
- The company executed strategic transactions, including the sale of its wireless business to T-Mobile, expected to deliver substantial proceeds.
- USM strengthened its balance sheet by paying down over $200 million in debt and increased free cash flow by $88 million over 2023.
- The company successfully rolled out mid-band 5G to cover close to 50% of its data traffic, enhancing customer experience.
- USM's tower business remains strong, with plans to add over 2,000 co-locations, indicating future growth potential.
Negative Points
- Despite improvements, net retail subscriber additions were still negative, highlighting ongoing challenges in the competitive market.
- Service revenues declined by 2% in the fourth quarter, primarily due to a decrease in the average retail subscriber base.
- The company faces significant cash obligations related to employee liabilities and tax obligations from the T-Mobile transaction.
- USM's postpaid handset net additions remain negative, despite efforts to improve customer care and network investments.
- The company is not issuing financial guidance for 2025 due to uncertainties surrounding the pending T-Mobile transaction.
Q & A Highlights
Q: Why was now the right time for Walter Carlson to take on the CEO role, and what changes are expected with his leadership?
A: Walter Carlson, President and CEO of TDS, explained that the Board had been planning a succession for some time, and with the transformative sale of wireless operations to T-Mobile, it was deemed the right moment for a leadership change. He emphasized continuity in mission and focus on the fiber and tower businesses post-transactions.
Q: Will UScellular move to AFFO reporting and consider a REIT structure for its tower business?
A: Doug Chambers, CFO of UScellular, confirmed plans to provide AFFO reporting post the T-Mobile transaction. However, LT Therivel, CEO of UScellular, clarified that while AFFO reporting is planned, structuring the tower business as a REIT is not currently on the agenda.
Q: What is the long-term vision for TDS Telecom's fiber expansion, and why is the target set at 1.8 million service addresses?
A: Kris Bothfeld, CFO of TDS Telecom, explained that the 1.8 million target reflects the completion of two major programs: the E-ACAM program and ongoing fiber expansion. The goal is to enhance fiber service in selected communities, with a focus on financial capacity and market conditions over the next five years.
Q: How does UScellular plan to monetize its remaining spectrum, particularly C-Band, and does the FCC's spectrum cap influence this strategy?
A: LT Therivel stated that while FCC spectrum cap changes could influence potential buyers, UScellular's decision to sell spectrum is driven by obtaining fair value rather than regulatory changes. The company remains open to selling when the right opportunity arises.
Q: What are the capital allocation priorities for UScellular post-transaction, and is there potential for dividends?
A: LT Therivel indicated that while specific guidance is premature, the tower and equity partnerships will generate attractive cash flows. The company will consider returning capital to shareholders and potentially establishing a regular dividend, subject to Board approval and future financial conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
