United States Cellular Corp (USM) Reports Mixed 2023 Results and Provides 2024 Guidance

• Revenue: Total operating revenues decreased by 6% year-over-year to $3,906 million in 2023.

• Net Income: Net income attributable to USM shareholders increased to $54 million in 2023, up from $30 million in 2022.

• Earnings Per Share: Diluted earnings per share rose to $0.63 in 2023, compared to $0.35 in the previous year.

• Subscriber Growth: Postpaid ARPU grew by 2%, while fixed wireless customers increased by 46%.

• 5G Network: USM began launching its 5G mid-band network to provide low latency and faster speeds.

• 2024 Guidance: USM estimates service revenues between $2,950-$3,050 million and capital expenditures of $550-$650 million for 2024.

On February 16, 2024, United States Cellular Corp (NYSE:USM) released its 8-K filing, detailing its financial performance for the fourth quarter and full year of 2023, and providing guidance for the upcoming year. USM, a regional wireless carrier serving approximately 5 million customers across various U.S. regions, reported a decrease in total operating revenues but an increase in net income for the year ended December 31, 2023.

Financial Performance Overview

USM’s total operating revenues for the fourth quarter of 2023 were $1,000 million, a decrease from $1,048 million in the same period of the previous year. Despite the revenue decline, the company saw a significant improvement in net income, reporting $14 million for the quarter, compared to a net loss of $(28) million in the fourth quarter of 2022. For the full year, USM’s operating revenues were $3,906 million, down from $4,169 million in 2022. However, net income attributable to USM shareholders increased to $54 million, or $0.63 per diluted share, from $30 million, or $0.35 per diluted share, in the prior year.

Operational Highlights and Challenges

The company’s Postpaid Average Revenue Per User (ARPU) grew by 2%, indicating a positive trend in revenue generation per customer. USM also reported substantial growth in its fixed wireless customer base, which expanded by 46% to 114,000 customers. Tower rental revenues increased by 8% to $100 million, contributing to the company’s profitability. Despite these achievements, USM faced challenges in subscriber growth due to aggressive competition in the wireless industry.

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Strategic Focus and 2024 Outlook

Laurent Therivel, USM’s President and CEO, commented on the company’s strategic focus, stating,

For 2024, USM plans to continue improving subscriber results, driving growth in fixed wireless and towers, and maintaining financial discipline as it advances its network through mid-band deployment.

Financial Health and Future Investments

USM’s balance sheet reflects a solid financial position, with cash and cash equivalents of $150 million as of December 31, 2023. The company’s capital expenditures for the year totaled $611 million, primarily directed towards network enhancements and the expansion of its 5G capabilities. Looking ahead, USM estimates service revenues between $2,950-$3,050 million and capital expenditures of $550-$650 million for the full year 2024.

As USM navigates the competitive landscape of the telecommunications industry, its focus on 5G deployment and fixed wireless growth positions it to potentially capitalize on emerging opportunities. Value investors and potential GuruFocus.com members may find USM’s commitment to financial discipline and strategic investments in technology an appealing aspect for consideration.

For more detailed information on USM’s financial performance and future outlook, interested parties can access the full earnings report and listen to the teleconference held on February 16, 2024, via the Events & Presentations page of investors.uscellular.com.

Explore the complete 8-K earnings release (here) from United States Cellular Corp for further details.

This article first appeared on GuruFocus.