U.S. Cellular's Q4 2024: Unpacking Contradictions in REIT Structure, Wireless Partnerships, and Convergence Strategy

These are the key contradictions discussed in United States Cellular Corporation's latest 2024Q4 earnings call, specifically including: REIT-style Structure Consideration, Wireless Partnerships and OneNeck IT Solutions Status, Convergence Strategy, and Wireless Partnerships:



Operational and Financial Performance:
- UScellular achieved a significant improvement in subscriber results and financials in 2024, with postpaid handset gross additions increasing by 16% year-over-year and postpaid handset churn decreasing by 14 basis points.
- The company's strategic review and transactions, including the sale of the wireless business to T-Mobile, are expected to deliver substantial proceeds and strengthen the remaining business.
- Despite a 2% decline in service revenues due to a decrease in the average retail subscriber base, adjusted operating income before depreciation and amortization (adjusted OIBDA) and adjusted EBITDA both increased by 3% for the full year.
- The improvement in financials was driven by the shutdown of the CDMA network, cost optimization initiatives, and increased data usage by customers.

Network Investments and Deployment:
- TDS Telecom increased its fiber service addresses by 129,000 in 2024, surpassing its goal of 125,000, with over 50% of its addresses now served by fiber.
- The company's capital expenditures in 2024 were down 24% on a consolidated level, contributing to an increase in free cash flow.
- The decline in capital expenditures was due to the completion of the 5G coverage build and a focus on mid-band network deployment to enhance speed and capacity.
- The reduction in capital expenditures is part of a disciplined financial strategy to improve margins and adjust cash flow.

Leadership and Strategic Transformation:
- The appointment of Walter C.D. Carlson as TDS President and CEO marks a strategic leadership change aimed at transforming the enterprise post the announced transactions.
- Priorities for 2025 include closing the T-Mobile transaction, focusing on the remaining assets at UScellular, and continuing the telecom business's focus on fiber strategy.
- The strategic transformation is designed to optimize asset usage, capital structure, and balance reinvestment in core businesses with shareholder returns.

Spectrum Transactions and Monetization:
- UScellular announced plans to sell select spectrum licenses, with the transactions reflecting prices above both appraised and book value.
- The spectrum sales are contingent upon the close of the T-Mobile transaction and are expected to deliver significant proceeds, allowing for capital returns to shareholders.
- The company believes the attributes of its C-band spectrum licenses, representing about 30% of its existing portfolio, are attractive for mid-band 5G use, which could lead to opportunistic monetization.