Second-quarter earnings at Telephone & Data Systems Inc.
(TDS) and its U.S. Cellular Corp. (USM) business declined, while
U.S. Cellular lost fewer overall subscribers than it did a year
earlier.
Earnings for both companies missed analysts' expectations, and
U.S. Cellular also lowered its guidance for full-year service
revenue to $3.93 billion to $4 billion from $3.98 billion to $4.08
billion.
TDS President and Chief Executive LeRoy T. Carlson Jr. said the
company's results "reflect the intense wireless and wireline
competition and the ongoing consumer and business economic
uncertainty."
Subscribers have left U.S. Cellular recently amid intense
competition in the wireless industry. Big carriers have continued
adding subscribers, and low-cost prepaid carriers are booming. U.S.
Cellular in May tapped Mary Dillon, formerly the global marketing
chief of McDonald's Corp. (MCD), to lead the company as its new
chief executive.
TDS reported a profit of $40.3 million, or 38 cents a share,
down from $66.4 million, or 60 cents, a year earlier. Revenue fell
0.8% to $1.23 billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 49 cents on $1.25 billion in revenue.
The company's physical access lines fell 4.2% from a year
earlier and 1% from the prior quarter.
Meanwhile, U.S. Cellular posted a profit of $40.8 million, or 47
cents a share, down from $81.8 million, or 94 cents, a year
earlier. Revenue fell 1.2% to $1.03 billion.
Analysts most recently forecast earnings of 68 cents on $1.04
billion in revenue.
The carrier, which operates in 26 states, lost 3,000 net
subscribers, breaking a two-quarter streak of subscriber growth.
The company lost 88,000 net subscribers a year earlier. It added
7,000 retail subscribers, compared with a loss of 59,000 net retail
customers a year earlier.
Retail average revenue per user fell by a penny to $46.81, and
retail postpaid churn was flat at 1.4%.
TDS said on Wednesday that one of its subsidiaries received
government approval for broadband expansion in 18 states. The
company will receive $85.9 million in federal grants in order to
help complete the expansion.
Shares of TDS and U.S. Cellular closed at $34.38 and $46.59,
respectively, on Wednesday and were inactive premarket.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com