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UNITED STATES CELLULAR CORP (USM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue declined 3% year over year to $970M; service revenue fell 2% to $742M, with diluted EPS at $0.05 vs $0.16 last year; Adjusted EBITDA was $208M (-11% YoY) as promotional intensity increased equipment losses .
  • Sequentially, revenue improved vs Q3 (equipment revenue up), but Adjusted EBITDA fell to $208M from $269M on higher promos and seasonality; non-GAAP profitability for FY24 improved vs FY23 despite a Q3 license impairment .
  • Strategic alternatives advanced: definitive agreement to sell wireless ops and select spectrum to T-Mobile (target mid-2025 close), plus spectrum sales to Verizon ($1.0B) and AT&T ($1.018B); UScellular withdrew 2025 guidance pending transaction closures .
  • Operational momentum: postpaid handset gross adds rose and churn fell; fixed wireless surpassed 150K customers; full-year free cash flow rose to $280M (+$88M YoY), and USM repurchased $55M of stock in 2024 .
  • Near-term stock narrative catalysts: regulatory approvals and closing timeline for T-Mobile and spectrum transactions; visibility on tower tenant additions and AFFO reporting post-close; continued mid-band 5G rollout and churn improvements .

What Went Well and What Went Wrong

What Went Well

  • Postpaid momentum and churn: “Postpaid handset gross additions increased year-over-year by 16% and postpaid handset churn decreased 14 basis points,” supporting subscriber trajectory improvements .
  • Fixed wireless growth: Customers “surpassed 150,000,” with Q3 at 140K; growth reflects attractive economics and network capacity gains .
  • Liquidity and FCF: FY24 free cash flow was $280M, up from $192M; debt reduced by >$200M in 2024, strengthening balance sheet .
  • Strategic value realization: Agreements to monetize retained spectrum ($1.0B Verizon; $1.018B AT&T), with sale prices above book/appraised values .

What Went Wrong

  • Top-line/service pressure: Q4 service revenue -2% YoY; total revenue -3% YoY, driven by declines in average retail subscribers .
  • Margin compression: Q4 Adjusted OIBDA (-14% YoY to $167M) and Adjusted EBITDA (-11% YoY to $208M) impacted by higher promotional expenses and equipment losses (equipment loss increased $13M) .
  • Subscriber net adds remained negative: Despite improved trajectory, management reiterated scale disadvantages and competitive pressures; postpaid net losses still negative .
  • Non-GAAP vs GAAP volatility: Q3 2024 license impairment of $136M (net of tax $102M) distorted GAAP comparisons; non-GAAP metrics used to normalize .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Operating Revenues ($USD Millions)$927 $922 $970
Service Revenues ($USD Millions)$743 $747 $742
Equipment Sales ($USD Millions)$184 $175 $228
Net Income Attributable to UScellular ($USD Millions)$17 $(79) $5
Diluted EPS ($USD)$0.20 $(0.92) $0.05
Adjusted OIBDA ($USD Millions)$227 $222 $167
Adjusted EBITDA ($USD Millions)$268 $269 $208

Segment breakdown

Segment MetricQ2 2024Q3 2024Q4 2024
Wireless Total Operating Revenues ($USD Millions)$902 $896 $944
Wireless Operating Income (Loss) ($USD Millions)$17 $(109) $(27)
Wireless Adjusted EBITDA ($USD Millions)$196 $191 $137
Towers Total Revenues ($USD Millions)$58 $59 $59
Towers Operating Income ($USD Millions)$19 $19 $18
Towers Adjusted EBITDA ($USD Millions)$31 $31 $30

KPIs

KPIQ2 2024Q3 2024Q4 2024
Postpaid Retail Connections (000s, end of period)4,027 3,999 3,985
Postpaid ARPU ($/mo)$51.45 $52.04 $51.73
Postpaid ARPA ($/mo)$130.41 $131.81 $131.10
Postpaid Handset Upgrade Rate (%)4.1% 3.5% 4.8%
Postpaid Total Churn (%)1.16% 1.25% 1.29%
Prepaid ARPU ($/mo)$32.37 $32.01 $30.59
Prepaid Churn (%)3.60% 3.30% 3.70%
Fixed Wireless Customers (000s)134 140 ≥150
Capital Expenditures ($USD Millions)$165 $120 $162
Owned Towers (count)4,388 4,407 4,409
Colocations (count)2,392 2,418 2,444
Tower Tenancy Rate1.55 1.55 1.55

Margins (SPGI)

MarginQ2 2024Q3 2024Q4 2024
EBITDA Margin %***
EBIT Margin %***
Net Income Margin %***
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Service Revenues ($USD Billions)FY 2024$2.95–$3.05 $2.95–$3.00 Narrowed (lower top end)
Adjusted OIBDA ($USD Millions)FY 2024$750–$850 $800–$875 Raised
Adjusted EBITDA ($USD Millions)FY 2024$920–$1,020 $970–$1,045 Raised
Capital Expenditures ($USD Millions)FY 2024$550–$650 $550–$600 Narrowed (lower top end)
2025 Financial GuidanceFY 2025N/ANot providing 2025 guidance due to pending T-Mobile transaction Withdrawn/Not provided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Strategic alternatives (T-Mobile + spectrum sales)Announced sale of wireless ops and select spectrum to T-Mobile; reaffirmed guidance; began segment reporting Transactions progressing; target mid-2025 close; spectrum sales above book/appraised value; capital return potential post-close Advancing toward close
Towers business outlookBegan separate reporting; steady third-party revenue; moderated industry CapEx AFFO reporting planned post T-Mobile close; no REIT structure now; expect densification to drive demand Foundation set; preparing for growth
Mid-band 5G deploymentFuture network investments focus on mid-band Mid-band now covers ~50% of data traffic; continued rollout in 2025 Expanding
Subscriber trajectory & churnSequential improvement in postpaid; ARPU up 2% Postpaid gross adds +16% YoY; churn down 14 bps; net adds still negative Improving but not yet positive
Fixed wireless134K customers Surpassed 150K customers Growing
Cost discipline & FCFStrong cost management; increased operating income/net income FY FCF $280M; debt down >$200M; expect lower CapEx in 2025 Strengthening
Regulatory/legalPublic interest filing; contingent spectrum deals Ongoing regulator interactions; spectrum transactions contingent on T-Mobile close Active engagement
AI/technology initiativesNot highlighted in Q2 PRAI improving care efficiency and training; unclear handset “super-cycle” impact Operational benefits emerging

Management Commentary

  • CEO LT Therivel: “We established a series of transactions that unlocks significant value for our stakeholders… we anticipate being in a position to return capital to shareholders” (subject to Board approval) .
  • CEO LT Therivel: “As of year-end, we've rolled out mid-band to sites, which cover close to 50% of our data traffic… we increased both profitability and free cash flow [and] paid down over $200 million in debt” .
  • CFO Doug Chambers: “Postpaid handset gross additions increased year-over-year by 16% and postpaid handset churn decreased 14 basis points… adjusted OIBDA declined 14% and adjusted EBITDA declined 11% [in Q4]” due to promotions .
  • CFO Doug Chambers (transactions): “Stated transaction price is $4.4B… $100M contingent upon achieving certain targets… T-Mobile debt exchange could reduce proceeds; expected cash taxes $225–$325M (T-Mobile deal), $325–$375M (Verizon/AT&T spectrum)” .

Q&A Highlights

  • Tower reporting and structure: Management plans to provide AFFO reporting post T-Mobile close; not pursuing REIT structure currently due to organizational constraints .
  • Spectrum monetization: FCC spectrum cap changes not driving timing; focus is on value realization; discussions held with 20+ companies; C-band retained for optionality with long build timelines .
  • Capital allocation: Post-close, potential to return capital to shareholders and consider dividends longer term; cautious on build-to-suit towers, open to inorganic tower acquisitions at rational valuations .
  • Transaction mechanics: T-Mobile debt exchange offer to USM noteholders may reduce cash proceeds; multiple employee/severance obligations and sizable cash tax payments expected upon closes .
  • Telecom fiber program: Expanded long-term targets (1.8M fiber addresses; 80% fiber-served footprint); 2025 priorities include 150K fiber addresses, sales/marketing scaling, and increased capex for E-ACAM .

Estimates Context

  • Wall Street consensus EPS and revenue estimates via S&P Global were unavailable at this time due to API limit; therefore, comparisons to consensus estimates are not provided. Where possible, the press release and call commentary have been used to contextualize performance .

Key Takeaways for Investors

  • Transaction-driven catalyst path: Mid-2025 targeted close for T-Mobile deal and contingent spectrum sales could unlock significant value; monitor regulatory milestones and debt exchange outcomes as determinants of net proceeds .
  • Core operations stable but pressured: Service revenue softness and promotional intensity weighed on Q4 margins; ongoing churn improvement and higher gross adds are encouraging but not yet translating to positive net adds .
  • Towers remnant likely cash-generative: Incremental T-Mobile colocations and future densification set up tower revenue growth; AFFO reporting should improve transparency; REIT conversion not near-term .
  • FCF and balance sheet: FY24 free cash flow rose to $280M and debt was reduced by >$200M; expect lower CapEx in 2025 as 5G coverage build transitions to mid-band capacity .
  • Fixed wireless momentum: Customers >150K and growing, suggesting durable incremental revenue streams tied to mid-band capacity enhancements .
  • Guidance discipline: 2025 guidance withheld pending deal outcomes; expect directional updates as closing visibility improves; 2024 guidance was raised on profitability and narrowed on service revenue/capex .
  • Trading lens: Near-term stock moves likely tied to deal timing, net proceeds clarity (including tax and exchange dynamics), and evidence of sustained operational improvements (churn, fixed wireless, ARPU).

Notes and sources: Q4 2024 8-K and Exhibit 99.1 press release ; Q4 earnings call transcripts – –; Q3 2024 8-K and press release –; Q2 2024 8-K press release –; Verizon spectrum sale PR –; AT&T spectrum sale PR –.