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UScellular's 2024 Financial Performance and Future Prospects

In a concerning trend, United States Cellular Corporation (NYSE: USM) reported its financial results for the fourth quarter and full year of 2024, showcasing significant shifts compared to previous years. With total operating revenues reaching $970 million for the fourth quarter, a notable decline from $1,000 million in the same period last year, the company faces pressure in maintaining profitability. For the full year, UScellular recorded $3,770 million in total revenues, a drop from $3,906 million in 2023.

The company reported a net income attributable to shareholders of $5 million for Q4 2024, which translates to $0.05 earnings per share. This figures represent a stark decrease from $14 million and $0.16 per share in the year-ago quarter. The overall yearly performance was troubling, with a net loss of $39 million translating to a loss of $0.46 per share, compared to a net income of $54 million with $0.63 earnings per share in 2023.

Key Highlights of 2024 Performance

Despite the recent downturns, UScellular did announce some positive metrics that could signal future stability. The company recorded growth in free cash flow and significant operational cash flows when compared to prior years, suggesting a commitment to enhancing financial discipline amid strategic reviews. These developments align with comments from UScellular President and CEO, Laurent Therivel, who emphasized the progress made in enhancing shareholder value while connecting people to essential services.

The full-year results indicated that net income excluding a significant third-quarter impairment loss totaled $63 million, showcasing an underlying operational improvement when factoring out extraordinary expenses. Moreover, for 2024, postpaid and prepaid net losses improved as evidenced by better churn rates, suggesting a potential turnaround in customer retention strategies.

Further, UScellular witnessed strong growth in its fixed wireless customer base, which increased by 27% year-over-year, underneath a consistent focus on expanding its 5G mid-band network capabilities.

Strategic Transactions and Future Plans

A crucial component of UScellular's strategy has been its recent transactions related to spectrum assets. On May 24, 2024, UScellular entered into discussions to sell its wireless operations and select spectrum assets to T-Mobile, with the deal expected to close by mid-2025 pending regulatory approvals. Alongside this, various other agreements were made to divest spectrum licenses to significant network operators, including Verizon and ATT, reflecting a shift in asset management and a response to changing market dynamics.

Investors and stakeholders remain cautious as 2025 financial guidance has not been provided due to the pending transaction with T-Mobile. Amid these developments, UScellular plans to focus on improving customer engagement and investing further into its network capabilities to enhance service offerings.

Concluding Thoughts

While the outlook for UScellular poses several challenges, the company has initiated a series of strategic moves to navigate its financial hardships. The telecom market's intense competition demands an agile approach from UScellular, as it looks to align its business model with modern demands and maximize operational efficiencies. The next financial call scheduled for February 21, 2025, will serve as a platform for the company to elaborate on its ongoing initiatives and recovery strategies in the face of adversity.