U.S. Cellular’s earnings per share of 18 cents beat consensus estimates of 11 cents, but the introduction of unlimited wasn’t enough to similarly boost the carrier’s net addition figures for the first quarter.
On Friday, U.S. Cellular posted a first quarter earnings report in which it recorded $936 million in revenue, missing expectations of $955.2 million. The company followed the negative service revenue trend seen at Verizon, AT&T, and Sprint during the first quarter, dropping 3 percent year over year to $746 million. Equipment sales revenue was also down 4 percent to $190 million.
During Friday’s call, U.S. Cellular President Ken Meyers reiterated his distaste for unlimited plans, but indicated the carrier was forced to come up with an offering once Verizon finally took the leap in February. As at Verizon, U.S. Cellular benefited from the move, he said. The plans were “very well received,” he added.
U.S. Cellular began offering unlimited plans with no fees for $60 per month at the end of February. It followed up with the introduction of unlimited plans for prepaid in April, though that move was too late to be reflected in the first quarter results.
“We did not immediately react to the early unlimited plans, and that impacted traffic and gross adds. However, we’ve also said that we’re price takers given our position in the industry. So when Verizon moved to offer unlimited plans, we moved also,” Meyers commented. “In just five weeks, 11 percent of new and existing postpaid lines had moved to these new plans.”
But the shift wasn’t enough to keep the carrier’s net add figures in the black.
U.S. Cellular noted 27,000 postpaid net losses, including 28,000 handset net losses and 1,000 connected device net additions during the quarter. The handset figure marked a significant year-over-year increase in U.S. Cellular’s losses, compared to 5,000 handset net losses in the first quarter 2016. Things weren’t much better on the prepaid side, where the carrier lost 4,000 subscribers compared to a gain of 12,000 the year prior. Total retail connections at the end of the period, though, were up, hitting 4.93 million compared to 4.85 million in the first three months of 2016.
Postpaid churn stood at 1.29 percent for the quarter – virtually flat year over year – while handset churn was down to 1.08 percent from 1.18 percent the year prior.
