UScellular reported a net loss of 31,000 postpaid customers, which includes 22,000 postpaid phone subscribers, in the third quarter of 2022.
The company’s net loss was $12 million for the third quarter of 2022 compared to net income of $34 million in the same period one year ago. Total service revenue was $781 million versus $788 million for the same period a year ago.
Since the last quarterly earnings call, the company launched a number of pricing and promotional offers to address the “subscriber challenges” that they saw in the first and second quarters, said UScellular President and CEO Laurent Therivel in prepared remarks during the company’s earnings call Friday.
“While I’m encouraged with the early results of these promotions, you can see our all-in postpaid subscriber results are still challenged,” he said. “But we are seeing a number of leading indicators moving in the right direction.”
Many of the company’s promotional efforts are designed to address churn, so it’s going to take some time for those efforts to translate into better overall subscriber results, Therivel said.
UScellular announced in June that it’s offering the same deals to new and existing customers.
Part of the problem is that coming out of the pandemic, the company saw a substantive increase in voluntary churn the first two quarters of this year. Therivel said he had hoped to have seen better improvements in voluntary churn in the third quarter and he expects it to come.
“I’m confident in the strategy and we’re going to stick with it,” he said.
On the positive side, the company saw a 54% increase in upgrades and a 6% increase in add-a-line gross adds compared to the prior year. As a result, the percent of postpaid handset connections in contract is now 62%, which is up from 59% from the end of the prior quarter. It’s also the highest percentage in contract since 2019, Therivel said. In-contract customers churn at a much lower rate than out-of-contract customers.
The quarter’s numbers also reflect increased competitive intensity and shifts in the macro economy, he said. Part of that is tied to AT&T using FirstNet to expand more into more of rural America.
T-Mobile also is marketing more aggressively, and cable companies are expanding. But the company is losing less to Verizon than it has historically, executives said.
On the fixed wireless access (FWA) side, Therivel said UScellular is grabbing share from the traditional DSL and satellite customers. Most of the sales are still on LTE, although it offers 5G FWA.
Therivel said that when UScellular turns on its mid-band spectrum at the end of next year, he expects more of the fixed wireless share will come from cable companies.
UScellular picked up both C-band and 3.45 GHz licenses in FCC auctions. The goal is the “flip a switch,” so to speak, toward the end of 2023 or early 2024 to turn on that spectrum and they expect to see improved speeds and service quality from that.
The tower business saw a 14% increase in revenue year over year. Tower revenues were $23.6 million in the third quarter compared with $22.9 million in the prior quarter. UScellular owns 4,329 towers.