U.S. Cellular reported its first quarter 2013 results on Friday, noting service revenues of $996.3 million, down from more than $1 billion in the year-ago quarter. Earnings aside, however, U.S. Cellular revealed something else very intriguing in its report: that it will sell Apple products later this year.
“We have a number of strategies in progress to increase loyalty and attract more customers, including our announcement today that we will begin offering Apple products later this year,” U.S. Cellular president and CEO Mary N. Dillon said. “Our smartphone penetration is currently 43 percent of core market customers and growing quickly. We believe there will be strong, ongoing demand for smartphones and data products and services from our customers, and we have significant room for growth in this area.”
The carrier didn’t say which Apple products it will offer, whether it will be 3G/4G-capable iPads, the iPhone or possibly even the highly-rumored budget iPhone. All it said was that the devices will be on sale later this year. We suspect it’s very possible we’ll see the iPhone 5, however, because U.S. Cellular is currently building out its 4G LTE network and hopes to cover 87 percent of its customers with the faster data service by the end of this year.
U.S. Cellular Reports First Quarter 2013 Results
U.S. Cellular to offer Apple products later this year; updates 2013 guidance
CHICAGO, May 3, 2013 /PRNewswire via COMTEX/ — As previously announced, U.S. Cellular will hold a teleconference May 3, 2013 at 9:30 a.m. CDT. Listen to the live call via the Conference Calls page of teldta.com or uscellular.com.
United States Cellular Corporation USM -1.90% reported service revenues of $996.3 million for the first quarter of 2013, versus $1,023.8 million for the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $4.9 million and $0.06 respectively, for the first quarter of 2013, compared to $62.5 million and $0.73, respectively, in the comparable period one year ago.
As previously announced on Nov. 7, 2012, U.S. Cellular reached a definitive agreement to sell its Chicago, St. Louis, central Illinois and three other markets (the “Divestiture Markets”) to subsidiaries of Sprint Nextel Corporation [NYSE:S] for $480 million (the “Divestiture Transaction”). The transaction has been approved by the FCC and the closing is expected to occur in the second quarter of 2013.
“We continued to expand our 4G LTE network and encourage customers to migrate, which has helped us further increase smartphone penetration and shift more customers to 4G LTE,” said Mary N. Dillon, U.S. Cellular president and CEO. “We added new prepaid customers through our Walmart distribution. In our core markets, postpaid gross additions were relatively flat and elevated churn resulted in a net customer loss.
“We have a number of strategies in progress to increase loyalty and attract more customers, including our announcement today that we will begin offering Apple products later this year. By further strengthening our device portfolio, we’ll give consumers another great reason to switch to U.S. Cellular, and enable our existing customers to choose from an even wider variety of iconic smartphones, and enjoy the outstanding U.S. Cellular customer experiences they deserve. Our smartphone penetration is currently 43 percent of core market customers and growing quickly. We believe there will be strong, ongoing demand for smartphones and data products and services from our customers, and we have significant room for growth in this area.
“We’re supporting this growth by bringing 4G LTE to 87 percent of our customers in 2013, and increasing our network capacity. In our core markets, 4G LTE smartphones were 76 percent of smartphones sold in the quarter, while smartphones overall were 62 percent of devices sold. We recently launched the 4G LTE Samsung Galaxy S� 4, and we have more devices to come throughout the year. While profitability continues to be impacted by the higher subsidies for 4G LTE smartphones, our long-term strategy is to balance those costs with growth in ARPU and reduced capital expenditures for our legacy networks.
“We’re continuing to enhance and differentiate the U.S. Cellular customer experience and expand our distribution. We began offering U.S. Cellular service through select Sam’s Club locations in 14 states in April, to increase availability in new channels. To attract more small and medium business customers, we’re launching a marketing campaign this month that addresses their unique needs. We’re also focused across U.S. Cellular on simplifying our operations and processes to increase efficiency and reduce complexity and cost.”
U.S. Cellular’s estimates of full-year 2013 results are shown below. Such estimates represent U.S. Cellular’s views as of the date of filing of U.S. Cellular’s Form 10-Q for the quarter ended March 31, 2013. Such forward–looking statements should not be assumed to be current as of any future date. U.S. Cellular undertakes no duty to update such information, whether as a result of new information, future events or otherwise. There can be no assurance that final results will not differ materially from such estimated results.
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