U.S. Cellular nearly doubles Q4 profit

U.S. Cellular, the nation’s seventh-largest wireless operator, nearly doubled its net income for the fourth quarter of 2004, crediting the increase to market expansion, new subscribers and the sale of some operations to fellow regional operator Alltel.

U.S. Cellular posted Q4 net revenues of $40.5 million, or 47 cents a share, almost double its Q4 2003 numbers of $20.6 million (or 24 cents a share). Service revenues were up 8.5% to $673.2 million from $620.6 million a year ago. The sale of operations in two markets to Alltel accounted for $10.1 million.

Not all the news was positive: U.S. Cellular’s average revenue per user dropped from $47.80 in the fourth quarter of 2003 to $46.12 in the final three months of 2004. And while U.S. Cellular also added 150,000 net customers during the fourth quarter—improving on the 141,000 subscribers the carrier added in the fourth quarter of 2003—the increase was tempered by a rise in postpaid customer churn, which rose to 1.6% in Q4 2004 from 1.4% the previous year.

Still, full-year net subscriber additions jumped in excess of 40% from 447,000 new customers in 2003 to 627,000 net additions in 2004, and U.S. Cellular ended the year with 4.95 million subscribers overall. Those numbers were buoyed by the carrier’s expansion into Oklahoma City, Lincoln, Neb. and Portland, Maine, three new markets where U.S. Cellular launched during the third quarter.

“During the year, we strengthened our footprint, initiating service in new markets that build on our existing footprint and divesting several that no longer supported our strategic direction,” U.S. Cellular president and CEO Jack Rooney said in a written statement. “We completed our [CDMA 1X] network upgrade initiative and enhanced our growing line of data services. And in 2004 we added a record number of new customers while keeping our churn rate low, despite wireless number portability.”