Telephone & Data Systems Inc.'s (TDS) first-quarter profit
dropped 14% as rising costs outpaced revenue gains, while its U.S.
Cellular Corp.'s (USM) profit also declined on net customer
losses.
U.S. Cellular--which accounts for the bulk of TDS's revenue--has
been losing postpaid subscribers due to increasing competition in a
wireless industry nearly saturated with cellphones. Big carriers
have continued to add customers on the strength of marquee
handsets.
TDS reported a profit of $41.6 million, or 40 cents a share,
down from $48.4 million, or 45 cents a share, a year earlier.
Revenue rose 3% to $1.26 billion.
Analysts polled by Thomson Reuters most recently forecast a
40-cent profit on $1.24 billion in revenue.
Operating expenses were up 4.6%.
Physical access lines slid 5.5% from a year earlier and 1.3%
from the prior quarter.
Meanwhile, U.S. Cellular posted a profit of $34.1 million, or 40
cents a share, down from $47.4 million, or 54 cents a share, a year
earlier. Revenue increased 3.2% to $1.06 billion.
Wall Street had forecast earnings of 41 cents on $1.05 billion
in revenue.
Operating costs climbed 5.7% to $1 billion.
The carrier, which operates in 26 states, said it lost a net
39,000 customers during the period, compared with a prior-year gain
of 6,000. It ended the period with about 6 million customers, down
1.9% from a year earlier.
Total average revenue per user increased 3.6% and postpaid
churn--or turnover rate--dipped to 1.37% from 1.41%.
About 43% of devices sold were smartphones, up from 17% a year
earlier.
TDS shares closed Thursday at $33.14 while U.S. Cellular
finished at $48.50. Neither was active premarket.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com