TDS, U.S. Cellular profit up despite lost subscribers

By Dow Jones Newswires
Posted Nov. 4, 2010 at 7:44 a.m.

Third-quarter earnings at Telephone & Data Systems Inc. and its U.S. Cellular Corp. business rose, with U.S. Cellular losing more subscribers than a year earlier.

Both companies topped analysts’ expectations and adjusted their revenue outlooks for the full year. U.S. Cellular narrowed its target while TDS raised its to $785 million to $800 million from $760 million to $790 million as the company also expects higher profit than before.

U.S. Cellular has been losing postpaid subscribers of late amid increasing competition in the wireless industry as the market is nearly saturated with cellphones. Big carriers have continued to add subscribers on the strength of marquee handsets.

TDS reported a profit of $40.6 million, or 38 cents a share, up from $36.8 million, or 34 cents a share, a year earlier. Revenue rose 0.7 percent to $1.27 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of 34 cents on $1.26 billion in revenue.

The company’s physical access lines decreased 4.2 percent from a year earlier and 1.5 percent from the prior quarter.

Meanwhile, U.S. Cellular posted a profit of $37.4 million, or 43 cents a share, up from $34.3 million, or 39 cents a share, a year earlier. Revenue edged up 0.3 percent to $1.06 billion.

Analysts most recently forecast earnings of 41 cents on $1.05 billion in revenue.

The carrier, which operates in 26 states, lost 25,000 net retail subscribers, compared with 6,000 a year ago. On a post-paid basis–users with long-term contracts–the company lost 25,000 subscribers compared with year-earlier additions of 8,000.

Retail average revenue per user rose 0.3 percent and retail postpaid churn fell to 1.6 percent from 1.7 percent.

Shares of TDS and U.S. Cellular closed at $35.93 and $47.44, respectively, Wednesday.

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