Executive Summary

Q3 2024 was operationally stable but headline GAAP loss driven by a $136M license impairment; non-GAAP EPS excluding the impairment was $0.26, matching prior year, while Adjusted EBITDA rose to $269M (+3% YoY) and Adjusted OIBDA to $222M (+1% YoY) .
Management raised and narrowed full-year 2024 guidance: Adjusted EBITDA to $970–$1,045M and Adjusted OIBDA to $800–$875M; service revenue range narrowed to $2.95–$3.00B and capex to $550–$600M .
Strategic catalysts: spectrum monetization agreements ($1.0B Verizon; $1.018B AT&T, plus smaller CBRS/C-Band/700MHz deals) contingent on the T-Mobile operations sale; expected incremental towers tenancy from T-Mobile MLA supports tower revenue durability .
Subscriber trajectory improved: postpaid handset net losses narrowed, postpaid ARPU up 2%, churn better YoY; fixed wireless customers grew 32% YoY to 140k .

What Went Well and What Went Wrong

What Went Well
- Raised profitability guidance (Adjusted EBITDA and Adjusted OIBDA) on disciplined cost control despite inflation and ongoing 5G deployment; CEO emphasized balancing subscriber momentum with financial discipline .
- Spectrum monetization progress: definitive agreements with multiple operators (Verizon $1.0B; AT&T $1.018B), unlocking value and optionality for retained mid-band (C-band) assets .
- Customer metrics improving: postpaid ARPU +2% YoY; both postpaid and prepaid churn improved; fixed wireless subscribers up to 140k; “us days” retention promotions cited as a driver .
- Quote: “Solid postpaid ARPU growth coupled with strong expense discipline gives us confidence to raise our 2024 Adjusted EBITDA guidance.” — Laurent C. Therivel, CEO .
What Went Wrong
- GAAP optics: recorded $136M license impairment (mmWave 28/37/39 GHz), yielding GAAP net loss of $(79)M and diluted EPS of $(0.92) in Q3; non-GAAP excludes impairment .
- Service revenues declined 2% YoY on a smaller average subscriber base; equipment sales down 13% YoY amid lower upgrade rates and intense competition (including cable wireless bundling) .
- Tower third‑party revenue growth slowed (1% YoY) due to industry CapEx moderation and defections (including Sprint-related), although management remains long-term bullish on densification and T‑Mobile tenancy .

Financial Results

Consolidated Summary (USD Millions unless noted)

Metric	Q1 2024	Q2 2024	Q3 2024
Total Operating Revenues	950	927	922
Service Revenues	754	743	747
Equipment Sales	196	184	175
Operating Income (Loss)	51	36	(90)
Net Income (Loss) Attributable to USM	18	17	(79)
Diluted EPS ($)	$0.20	$0.20	$(0.92)
Adjusted EBITDA (Non-GAAP)	272	268	269
Adjusted OIBDA (Non-GAAP)	228	227	222
Free Cash Flow	61	165	105

Notes: Free Cash Flow = operating cash flow less capex and software license payments (Non-GAAP) .

Segment Breakdown

Segment (USD Millions)	Q3 2023	Q3 2024
Wireless Total Operating Revenues	938	896
Wireless Operating Income (Loss)	38	(109)
Wireless Adjusted EBITDA	190	191
Towers Total Revenues	57	59
Towers Operating Income	19	19
Towers Adjusted EBITDA	30	31

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Postpaid ARPU ($)	51.96	51.45	52.04
Postpaid Net Adds (Losses)	(44,000)	(24,000)	(28,000)
Postpaid Churn (%)	1.22%	1.16%	1.25%
Prepaid Net Adds (Losses)	(13,000)	3,000	13,000
Fixed Wireless Subscribers (’000)	124	134	140

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Service Revenues	FY 2024	$2.95B–$3.05B	$2.95B–$3.00B	Narrowed lower top end
Adjusted OIBDA (Non-GAAP)	FY 2024	$750M–$850M	$800M–$875M	Raised & narrowed
Adjusted EBITDA (Non-GAAP)	FY 2024	$920M–$1,020M	$970M–$1,045M	Raised & narrowed
Capital Expenditures	FY 2024	$550M–$650M	$550M–$600M	Narrowed lower top end

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Spectrum Monetization	Strategic alternatives to monetize ~70% retained spectrum; process active; impairment testing noted; cautious commentary on value	Executed agreements: $1.0B Verizon, $1.018B AT&T; additional smaller sales; cash tax impacts discussed ($200–$250M USM; $150–$200M TDS)	Accelerating monetization; clearer proceeds and tax outlook
T-Mobile Transaction	Definitive agreement; regulatory process underway; towers MLA expected to anchor tenancy	On track for mid-2025 close; spectrum lease for up to 1 year post-close; tower revenues expected to rise with 2,015 towers	Execution phase; operational transition details clarified
Towers & Densification	Industry CapEx moderation slowing third-party growth; long-run bullish on co-location rate uplift	Near-term slow growth persists; groundwork for independent towerco; buyback ground leases; expect densification amid limited new spectrum	Foundation building; long-term demand thesis intact
Subscriber Momentum	Sequential better net adds, improved churn via “us days”; ARPU +2% YoY	Postpaid net losses improved YoY; continued retention/promo intensity; postpaid ARPU +2% YoY	Sustained improvement
AI & Operations	Too early for handset “super cycle”; using AI in care for efficiency	AI helps reduce training time and care costs; long-term bullish on consumer AI, near-term ops benefits	Operational efficiency gains continuing

Management Commentary

“Postpaid handset results improved year-over-year due to our promotional and retention actions… Solid postpaid ARPU growth coupled with strong expense discipline gives us confidence to raise our 2024 Adjusted EBITDA guidance.” — Laurent C. Therivel, CEO .
“We expect total cash taxes related to these recently announced spectrum transactions to be in the range of $200–$250M for UScellular and $150–$200M for TDS… in addition to estimated cash taxes on the pending T-Mobile transaction.” — Doug Chambers, CFO .
“Future 5G network investments will predominantly be dedicated to the deployment of mid-band spectrum… to enhance 5G speed and capacity.” — Laurent C. Therivel, CEO .
“Our postpaid ARPU also increased 2%… 54% of our postpaid handset customers on the top 2 tier plans compared to 46% a year ago.” — Laurent C. Therivel, CEO .
“Pending transaction with T-Mobile… commitment to these 2,015 incremental towers for an initial term of 15 years is expected to significantly increase third-party tower revenues.” — Doug Chambers, CFO .

Q&A Highlights

Spectrum transactions and taxes: CFO detailed expected cash taxes ($200–$250M USM; $150–$200M TDS) and that estimates are net of NOLs/interest carryforwards; regulatory timing may require spectrum leases post-close .
Use of proceeds: Board will determine; options include debt paydown, fiber acceleration at TDS Telecom, potential shareholder returns; focus remains on closing transactions .
Towers strategy: Emphasis on improving co-location rates; possible tuck-in acquisitions if valuations are sensible; groundwork for independent tower operations and ground lease buybacks .
Convergence/MVNO: TDS Telecom advancing MVNO via NCTC with a national 5G partner; trials underway before broader launch .
AI impact: No “super cycle” yet on devices; tangible operational efficiencies in care, training, and potential store/digital benefits .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable due to vendor request limits; therefore, beat/miss vs consensus cannot be determined at this time. Management raised full-year Adjusted EBITDA and Adjusted OIBDA guidance, signaling stronger profitability trajectory .
If consensus becomes available, areas likely to be revised: 2024 profitability (Adjusted EBITDA/OIBDA up), capex lower end, service revenue narrowed range reflecting subscriber base dynamics .

Key Takeaways for Investors

Profitability inflection: Despite headline GAAP loss from a one-time license impairment, non-GAAP metrics and raised FY guidance underscore improving underlying profitability and cost control .
Spectrum monetization is a major catalyst: ~$2.02B of definitive spectrum sale agreements (Verizon and AT&T), contingent on T-Mobile close, with clear tax implications; potential special distributions/uses of cash to be determined by the Board .
Towers optionality: T-Mobile MLA adds a long-term anchor tenant; densification thesis supported by constrained new spectrum pipeline, positioning towers for medium-term growth .
Subscriber trajectory improving: ARPU mix shift to higher-tier plans, churn improvements via retention promotions; monitor competitive intensity from cable wireless bundling .
Fixed wireless growth continues: 140k customers (+32% YoY); leverages mid-band deployment plans to enhance capacity/speeds .
Execution risks: Regulatory approvals and transaction sequencing; cash tax obligations around spectrum and T-Mobile deals; industry CapEx moderation weighs on near-term tower revenue growth .
Near-term trading implications: Stock likely sensitive to regulatory milestones, updates on spectrum sale closings, and any clarity on use of proceeds; medium-term thesis balances tower co growth and optionality on retained spectrum (notably C-band) .

Appendix: Additional Quantitative Comparisons

YoY vs QoQ Headline Metrics

Metric	Q3 2023	Q2 2024	Q3 2024
Total Operating Revenues	963	927	922
Service Revenues	762	743	747
Diluted EPS ($)	$0.26	$0.20	$(0.92)
Adjusted EBITDA (Non-GAAP)	263	268	269

Non-GAAP Impairment Bridge (Q3 2024)

Item	Amount
Loss on impairment of licenses	$136M
Deferred tax benefit on tax-amortizable portion	$(34)M
Net non-GAAP adjustment subtotal	$102M
Non-GAAP Net Income Attributable to USM	$23M
Non-GAAP Diluted EPS	$0.26

Cash Flow and Balance Sheet Highlights (9M 2024 vs 9M 2023)

Metric	9M 2023	9M 2024
Cash from Operating Activities	$719M	$761M
Capex	$(454)M	$(399)M
Free Cash Flow	$237M	$331M
Cash & Cash Equivalents (End of Period)	$185M	$288M
Long-term Debt, net (Balance Sheet)	$3,044M (Dec-23)	$2,882M (Sep-24)

Disclaimers: Non-GAAP measures and reconciliations as provided by the company; spectrum transactions subject to regulatory approvals and contingent on the T‑Mobile transaction .

UNITED STATES CELLULAR CORP (USM)·Q3 2024 Earnings Summary