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US Cellular Loses Customers as Profit Cut in Half

Thursday, 05 Aug 2010 03:59 PM

Regional cell phone company U.S. Cellular Corp. on Thursday said second-quarter results came below its own expectations as competition was tough and customers were opting for cheaper plans.

The Chicago-based company is the country's sixth-largest wireless carrier by number of subscribers. It lost 3,000 subscribers in the quarter, ending with 6.1 million.

The company lost 29,000 contract-signing customers, who are the most lucrative, and made up for it with the addition of prepaid and wholesale customers.

"We faced significant challenges from competition and the economy," said CEO Mary Dillon, who joined the company June 1. She was previously chief marketing officer at McDonald's Corp.

She said the company now plans to increase revenue from data services by beefing up the company's portfolio of smart phones with Android-powered models, a familiar refrain across the industry. Motorola, based nearby in Schaumburg, Ill., is emerging as a major maker of Android phones, but Dillon named Samsung and HTC as additions to the lineup.

The company's net income came to $40.8 million, or 47 cents per share, compared with $81.8 million, or 94 cents per share, a year ago.

Revenue fell 1 percent to $1.03 billion from $1.04 billion.

Analysts on average expected earnings of 68 cents per share on $1.04 billion in revenue, according to Thomson Reuters.

U.S. Cellular also cut its full-year forecast for service revenue to a range $3.925 billion to $4 billion, from a range of $3.975 billion to $4.075 billion. It cuts its forecast for operating income to $200 million to $250 million from $250 million to $350 million.

U.S. Cellular shares fell 28 cents, or 0.6 percent, to $46.31 in afternoon trading. At the market's open, the shares fell as much as 5 percent, but recovered quickly.

Telephone and Data Systems Inc., which also has some fixed-line operations, owns 82 percent of U.S. Cellular,

TDS shares rose 51 cents, or 1.5 percent, to $34.89.

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Regional cell phone company U.S. Cellular Corp. on Thursday said second-quarter results came below its own expectations as competition was tough and customers were opting for cheaper plans.The Chicago-based company is the country's sixth-largest wireless carrier by number...
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