USM Earning Date, Transcript Summary & Report

Earnings Surprise Achieved: United States Cellular Corporation beats earnings expectations with reported EPS of $0.05, exceeding expectations of $-0.1.

Cost Reduction Success: In 2024, both businesses maintained their cost reduction programs, resulting in expanded margins and a 7% increase in adjusted EBITDA on a consolidated basis.

Debt Reduction and Cash Flow: The company paid down over $200 million in debt, strengthening its balance sheet and maintaining a free cash flow positive position.

5G Deployment Expansion: The 5G mid-band deployment and fiber program at TDS Telecom increased the footprint nearly 30% over the past three years, enhancing competitive positioning.

Retail Subscriber Growth: Retail subscriber results showed meaningful year-over-year progress, including growth in fixed wireless, which surpassed 150,000 customers.

Customer Retention Improvement: Postpaid handset gross additions increased year-over-year by 16%, and postpaid handset churn decreased by 14 basis points, indicating improved customer retention.

Free Cash Flow Increase: Free cash flow in 2024 was $280 million, an $88 million increase over 2023, primarily due to profitability improvements and decreased capital expenditures.

Residential Revenue Growth: TDS Telecom's fiber strategy resulted in a 6% increase in residential revenues, driven by growth in broadband connections and average revenue per connection.

Fiber Service Expansion: TDS Telecom added 129,000 fiber service addresses in 2024, surpassing its goal of 125,000, and plans to deliver 150,000 fiber service addresses in 2025.

Network Quality Leadership: The company ranked first in the north central region according to JD Power 2025 US wireless network quality performance study, reflecting strong network performance.

Earnings Beat, Revenue Decline: Despite beating earnings expectations with an EPS of $0.05, the company reported a 2% decline in service revenues, primarily driven by a decrease in the average retail subscriber base.

Subscriber Addition Challenges: Net retail subscriber additions were negative, indicating ongoing challenges in the competitive environment and the company's lack of scale.

Profitability Pressures and Declines: Adjusted operating income before depreciation and amortization (OIBDA) declined by 14%, and adjusted EBITDA decreased by 11%, reflecting pressures on profitability despite some cost optimization efforts.

Financial Guidance Uncertainty: The company is not issuing financial guidance for 2025, indicating uncertainty in future performance and potential challenges ahead.

Transaction Uncertainty: The pending transaction with T-Mobile is subject to regulatory approvals and other closing conditions, which introduces uncertainty regarding the timing and completion of the deal.

Tax Obligations Impacting Cash Flow: The company expects to incur significant cash income tax obligations related to the gain on sale from the T-Mobile transaction, estimated between $225 to $325 million, which could impact cash flow.

Severance Obligations Impact: There are expected severance obligations for employees not retained by T-Mobile, which may include cash obligations for accrued wages, bonuses, and other benefits, adding to financial liabilities.

Increased Legal and Advisory Costs: The company anticipates incurring additional legal, advisory, and investment banking fees in 2025 and 2026 related to the pending transactions, which could further strain financial resources.