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U.S. Cellular Reports Third Quarter Results
Data revenues increase 34 percent

CHICAGO, Nov. 5 /PRNewswire-FirstCall/ --

Note: Comparisons are year over year unless otherwise noted.

3Q 2009 Highlights

  • Postpay net additions were 8,000; prepaid net losses were 14,000.
  • Service revenues of $984.9 million, down 3 percent due primarily to a $24.7 million decrease in inbound roaming revenues.
  • Retail service ARPU (average revenue per unit) increased from $46.97 to $47.02.
  • 34 percent increase in data revenues, to $174.3 million, representing 18 percent of service revenues. Data revenue per customer increased from $7.01 to $9.46.
  • Postpay churn was 1.7 percent; postpay customers comprised 96 percent of retail customers.
  • 7 percent increase in cell sites in service, to 7,161.

As previously announced, U.S. Cellular® will hold a teleconference on Nov. 5, 2009, at 10:00 a.m. Chicago time. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com or uscellular.com.

United States Cellular Corporation (NYSE: USM) reported service revenues of $984.9 million for the third quarter of 2009, a 3 percent decrease from $1,013.9 million in the comparable period one year ago, due primarily to a $24.7 million reduction in inbound roaming revenues related to the acquisition of Alltel Corporation by Verizon Wireless. Net income attributable to U.S. Cellular and related diluted earnings per share were $35.6 million and $0.41, respectively, for the third quarter of 2009, compared to $89.9 million and $1.02, respectively, in the comparable period one year ago. In the third quarter of 2008, U.S. Cellular recorded a $16.4 million pre-tax gain on disposition of investments related to Rural Cellular Corporation.

"During the third quarter, both gross and net retail additions improved significantly over the second quarter," said John E. Rooney, U.S. Cellular president and CEO. "We reached out with targeted postpay promotions and more value-driven prepaid plans and customers responded well, particularly in our larger markets. In fact, retail net additions improved sequentially each month in the quarter.

"Data revenues grew 34 percent, helping to offset the expected decline in inbound roaming revenue," continued Rooney. "To promote continued growth in data revenues, we have accelerated the expansion of our 3G network, reaching approximately 75 percent of our customers at the end of the third quarter. This will help us further drive the already strong sales of smartphones, messaging products and data applications. We're also seeing excellent demand for our premium phones, like the recently launched LG Bliss(TM) and LG Tritan(TM). And, we're optimizing our handset mix, including the recent launch of the Blackberry Tour(TM) to promote sales in all of our customer segments during the holiday season.

"As expected, operating income declined this quarter, reflecting lower revenues, as well as increased spending in support of multi-year initiatives," added Rooney. "These initiatives will be a strong focus for U.S. Cellular in 2010 and beyond, enabling us to increase efficiency, while strengthening our relationships with customers and developing targeted marketing and sales programs for all channels."

Guidance

Guidance for the year ending Dec. 31, 2009 is as follows. Guidance is unchanged from Aug. 6, 2009. There can be no assurance that final results will not differ materially from this guidance.


    U.S. Cellular 2009 guidance as of Nov. 5, 2009 is as follows:

        Service revenues                                 $3,900-$3,950 million
        Operating income(1)                                  $300-$375 million
        Depreciation, amortization and accretion(1)       Approx. $600 million
        Capital expenditures                              Approx. $575 million

    (1)  Includes losses on disposals of assets.

The foregoing guidance represents the views of management as of Nov. 5, 2009 and should not be assumed to be accurate as of any other date. U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events or otherwise.

Conference call information

U.S. Cellular will hold a conference call on Nov. 5, 2009 at 10:00 a.m. Chicago time.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of uscellular.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of uscellular.com.

About U.S. Cellular®

United States Cellular Corporation, the nation's fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed approximately 8,700 full-time equivalent associates as of Sept. 30, 2009. At the end of the quarter, Telephone and Data Systems, Inc. owned 82 percent of U.S. Cellular.

Visit uscellular.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information, and more.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: The ability of the company to successfully manage and grow its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded our debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by the company; and the ability to obtain or maintain roaming arrangements with other carriers. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.




                         UNITED STATES CELLULAR CORPORATION
                                SUMMARY OPERATING DATA

    Quarter Ended     9/30/2009  6/30/2009  3/31/2009  12/31/2008   9/30/2008
                      ---------  ---------  ---------  ----------   ---------
     Total
      population
        Consolidated
         markets(1)  85,118,000 83,726,000 83,726,000  83,014,000  82,875,000
        Consolidated
         operating
         markets(1)  46,306,000 46,306,000 46,306,000  46,009,000  45,493,000
     All customers
        Total at end
         of period    6,131,000  6,155,000  6,243,000   6,196,000   6,176,000
        Gross
         additions      386,000    317,000    404,000     395,000     367,000
        Net
         additions
         (losses)       (24,000)   (88,000)    47,000      20,000     (18,000)
     Market
      penetration
      at end of
      period
        Consolidated
         markets(2)         7.2%       7.4%       7.5%        7.5%        7.5%
        Consolidated
         operating
         markets(2)        13.2%      13.3%      13.5%       13.5%       13.6%
     Retail
      customers
        Total at end
         of period    5,705,000  5,711,000  5,770,000   5,707,000   5,674,000
        Gross
         additions      351,000    286,000    366,000     352,000     325,000
        Net postpay
         additions
         (losses)         8,000    (32,000)    60,000      41,000      12,000
        Net prepay
         additions
         (losses)       (14,000)   (27,000)     3,000      (8,000)    (15,000)

     Cell sites in
      service             7,161      7,043      6,942       6,877       6,716
     Average
      monthly
      revenue per
      unit(3)            $53.49     $52.41     $52.54      $52.71      $54.59
        Retail
         service
         revenue per
         unit(3) (5)     $47.02     $46.85     $46.78      $46.43      $46.97
        Inbound
         roaming
         revenue per
         unit(3) (5)      $3.73      $3.35      $3.21       $4.25       $5.03
        Other
         revenue per
         unit(3) (5)      $2.74      $2.21      $2.55       $2.03       $2.59
     Postpay churn
      rate(4)               1.7%       1.7%       1.5%        1.6%        1.6%
     Construction
      expenditures
      (000s)           $128,900    $91,200   $137,700    $190,000    $146,100

    (1)  Used only to calculate market penetration of consolidated markets
         and consolidated operating markets, respectively, which is
         calculated by dividing customers by the total market population
         (without duplication of population in overlapping markets).
    (2)  Calculated by dividing the number of wireless customers at the end
         of the period by the total population of consolidated markets and
         consolidated operating markets, respectively, as estimated by
         Claritas.
    (3)  Derived from Service revenues as reported in Financial Highlights
         for each respective quarter as follows:



    Service revenue
     (000s)            $984,923   $974,755   $981,874    $976,952  $1,013,928
    Components
      Retail service
     revenue (000s)     865,867    871,209    874,098     860,503     872,397
      Inbound roaming
     revenue (000s)      68,767     62,223     60,057      78,768      93,472
      Other revenue
     (000s)              50,289     41,323     47,719      37,681      48,059

    Divided by average
     customers (000s)     6,138      6,199      6,229       6,178       6,191
    Divided by three
     months in each quarter   3          3          3           3           3

    Average monthly
     revenue per unit    $53.49     $52.41     $52.54      $52.71      $54.59
    Retail service
     revenue per unit    $47.02     $46.85     $46.78      $46.43      $46.97
    Inbound roaming
     revenue per unit     $3.73      $3.35      $3.21       $4.25       $5.03
    Other revenue
     per unit             $2.74      $2.21      $2.55       $2.03       $2.59



    (4)  Calculated by dividing the total postpay customer disconnects during
         the quarter by the average postpay customer base for the quarter.
    (5)  Long-distance revenue was reclassified in the fourth quarter of 2008
         from Other revenue to Retail service revenue and Inbound roaming
         revenue.  Previous quarters have been adjusted to reflect this
         change.



                        United States Cellular Corporation
                 Consolidated Statement of Operations Highlights
                          Three Months Ended September 30,
      (Unaudited, dollars and shares in thousands, except per share amounts)

                                                          Increase (Decrease)
                                                          -------------------
                                     2009        2008      Amount   Percent
                                     ----        ----      ------   -------
     Operating revenues
        Service                    $984,923  $1,013,928   $(29,005)   (3%)
        Equipment sales              73,377      77,947     (4,570)   (6%)
                                     ------      ------     ------
           Total operating
            revenues              1,058,300   1,091,875    (33,575)   (3%)
                                  ---------   ---------    -------
     Operating expenses
        System operations
         (excluding
         Depreciation,
          amortization and
          accretion reported
          below)                    205,458     197,473      7,985     4%
        Cost of equipment sold      189,354     185,992      3,362     2%
        Selling, general and
         administrative             454,839     436,135     18,704     4%
        Depreciation,
         amortization and
         accretion                  147,586     145,434      2,152     1%
        Loss on asset
         disposals, net               3,371       6,884     (3,513)  (51%)
                                      -----       -----     ------
           Total operating
            expenses              1,000,608     971,918     28,690     3%
                                  ---------     -------     ------

     Operating income                57,692     119,957    (62,265)  (52%)

     Investment and other
      income (expense)
        Equity in earnings of
         unconsolidated
         entities                    23,126      22,319        807     4%
        Interest and dividend
         income                       1,420       1,137        283    25%
        Gain on disposition of
         investments                      -      16,628    (16,628)  N/M
        Interest expense            (19,358)    (19,722)       364     2%
        Other, net                      905         391        514   N/M
                                        ---         ---        ---
           Total investment
            and other income
            (expense)                 6,093      20,753    (14,660)  (71%)
                                      -----      ------    -------

     Income before income
      taxes                          63,785     140,710    (76,925)  (55%)
        Income tax expense           22,541      45,506    (22,965)  (50%)
                                     ------      ------    -------

     Net income                      41,244      95,204    (53,960)  (57%)
        Less: Net income
         attributable to
         noncontrolling
         interests, net of tax       (5,606)     (5,255)      (351)   (7%)
                                     ------      ------       ----
     Net income attributable
      to U.S. Cellular              $35,638     $89,949   $(54,311)  (60%)
                                    =======     =======  =========

     Basic weighted average
      shares outstanding             86,848      87,460       (612)   (1%)
     Basic earnings per share
      attributable to
      U.S. Cellular
      shareholders                    $0.41       $1.03     $(0.62)  (60%)
                                      =====       =====     ======

     Diluted weighted average
      shares outstanding             87,128      87,833       (705)   (1%)
     Diluted earnings per
      share attributable to
      U.S. Cellular
      shareholders                    $0.41       $1.02     $(0.61)  (60%)
                                      =====       =====     ======

     N/M - Percentage change not meaningful



                        United States Cellular Corporation
                    Consolidated Statement of Operations Highlights
                            Nine Months Ended September 30,
      (Unaudited, dollars and shares in thousands, except per share amounts)

                                                           Increase (Decrease)
                                                            ------------------
                                        2009        2008     Amount  Percent
                                        ----        ----     ------  -------
     Operating revenues
        Service                     $2,941,552  $2,963,374   $(21,822)   (1%)
        Equipment sales                212,062     226,949    (14,887)   (7%)
                                       -------     -------    -------
              Total operating
               revenues              3,153,614   3,190,323    (36,709)   (1%)
                                     ---------   ---------    -------
     Operating expenses
        System operations
         (excluding Depreciation,
         amortization and accretion
         reported below)               600,267     585,141     15,126     3%
        Cost of equipment sold         531,110     540,182     (9,072)   (2%)
        Selling, general and
         administrative              1,277,357   1,258,177     19,180     2%
        Depreciation,
         amortization and
         accretion                     423,851     433,222     (9,371)   (2%)
        Loss on asset
         disposals, net                  7,648      16,776     (9,128)  (54%)
                                         -----      ------     ------
              Total operating
               expenses              2,840,233   2,833,498      6,735     -
                                     ---------   ---------      -----

     Operating income                  313,381     356,825    (43,444)  (12%)

     Investment and other
      income (expense)
        Equity in earnings of
         unconsolidated
         entities                       73,247      66,361      6,886    10%
        Interest and dividend
         income                          2,648       4,471     (1,823)  (41%)
        Gain on disposition of                                          N/M
         investments                         -      16,628    (16,628)
        Interest expense               (57,767)    (60,611)     2,844     5%
        Other, net                       1,183       1,109         74     7%
                                         -----       -----         --
              Total investment
               and other income
               (expense)                19,311      27,958     (8,647)  (31%)
                                        ------      ------     ------

     Income before income
      taxes                            332,692     384,783    (52,091)  (14%)
        Income tax expense             111,521     137,062    (25,541)  (19%)
                                       -------     -------    -------

     Net income                        221,171     247,721    (26,550)  (11%)
        Less: Net income
         attributable to
         noncontrolling
         interests, net of
         tax                           (17,583)    (14,613)    (2,970)  (20%)
                                       -------     -------     ------
     Net income attributable
      to U.S. Cellular                $203,588    $233,108   $(29,520)  (13%)
                                      ========    ========  =========

     Basic weighted average
      shares outstanding                87,011      87,534       (523)   (1%)
     Basic earnings per share
      attributable to
      U.S. Cellular
      shareholders                       $2.34       $2.66     $(0.32)  (12%)
                                         =====       =====     ======

     Diluted weighted average
      shares outstanding                87,216      87,908       (692)   (1%)
     Diluted earnings per
      share attributable to
      U.S. Cellular
      shareholders                       $2.33       $2.65     $(0.32)  (12%)
                                         =====       =====     ======

     N/M - Percentage change not meaningful



                         United States Cellular Corporation
                       Consolidated Balance Sheet Highlights
                          (Unaudited, dollars in thousands)

                               ASSETS

                                                September 30,  December 31,
                                                    2009           2008
                                                    ----           ----
     Current assets
        Cash and cash equivalents                 $404,894       $170,996
        Accounts receivable from
         customers and other                       447,958        419,619
        Inventory                                  121,073        116,564
        Prepaid income taxes                         4,793         22,515
        Prepaid expenses                            63,020         51,645
        Net deferred income tax asset               19,481         19,481
        Other current assets                        53,101         14,227
                                                    ------         ------
                                                 1,114,320        815,047

     Investments
        Licenses                                 1,445,501      1,433,415
        Goodwill                                   494,737        494,279
        Customer lists                               5,273          8,936
        Investments in unconsolidated entities     177,497        156,637
        Notes and interest receivable - long-term    4,247          4,297
                                                     -----          -----
                                                 2,127,255      2,097,564

     Property, plant and equipment
        In service and under construction        5,718,767      5,884,383
        Less: accumulated depreciation           3,157,001      3,264,007
                                                 ---------      ---------
                                                 2,561,766      2,620,376

     Other assets and deferred charges              38,484         33,055

     Total assets                               $5,841,825     $5,566,042
                                                ==========     ==========



                       United States Cellular Corporation
                     Consolidated Balance Sheet Highlights
                         (Unaudited, dollars in thousands)

                  LIABILITIES AND SHAREHOLDERS' EQUITY

                                                   September 30,  December 31,
                                                       2009           2008
                                                       ----           ----
     Current liabilities
        Current portion of long-term debt             $10,088         $10,258
        Accounts payable
           Affiliated                                   8,633           9,613
           Trade                                      235,353         248,785
        Customer deposits and deferred revenues       146,224         151,082
        Accrued taxes                                  56,500          17,643
        Accrued compensation                           57,012          55,969
        Other current liabilities                     102,157         108,533
                                                      -------         -------
                                                      615,967         601,883

     Deferred liabilities and credits
        Net deferred income tax liability             518,245         478,106
        Other deferred liabilities and credits        250,762         233,619
                                                      -------         -------
                                                      769,007         711,725

     Long-term debt                                   997,552         996,636

     Commitments and contingencies

     Noncontrolling interests with
      mandatory redemption features                       708             589

     Equity
     U.S. Cellular shareholders' equity
        Common Shares, par value $1 per share          55,068          55,068
        Series A Common Shares, par value $1
         per share                                     33,006          33,006
        Additional paid-in capital                  1,353,544       1,340,146
        Treasury shares                               (63,912)        (50,258)
        Retained earnings                           2,020,710       1,828,680
                                                    ---------       ---------
           Total U.S. Cellular shareholders'
            equity                                  3,398,416       3,206,642

     Noncontrolling interests                          60,175          48,567
                                                       ------          ------

        Total equity                                3,458,591       3,255,209

     Total liabilities and equity                  $5,841,825      $5,566,042
                                                   ==========      ==========



                        United States Cellular Corporation
                       Consolidated Statement of Cash Flows
                          Nine Months Ended September 30,
                         (Unaudited, dollars in thousands)

                                                          2009      2008
                                                          ----      ----
     Cash flows from operating activities
         Net income                                     $221,171  $247,721
         Add (deduct) adjustments to reconcile
          net income to net cash flows from operating
          activities
               Depreciation, amortization and accretion  423,851   433,222
               Bad debts expense                          73,100    52,753
               Stock-based compensation expense           13,000    11,293
               Deferred income taxes, net                 44,429    44,486
               Equity in earnings of
                unconsolidated entities                  (73,247)  (66,361)
               Distributions from unconsolidated
                entities                                  51,306    50,859
               Gain on disposition of investments              -   (16,628)
               Loss on asset disposals, net                7,648    16,776
               Excess tax benefit from stock awards           (4)   (1,018)
               Other noncash expense                       1,828     1,539
         Changes in assets and liabilities from
          operations
               Accounts receivable                      (101,263)  (71,551)
               Inventory                                  (4,509)  (11,552)
               Accounts payable - trade                  (13,432)   11,383
               Accounts payable - affiliate                 (980)      134
               Customer deposits and deferred revenues    (4,858)    9,534
               Accrued taxes                              58,139    (1,724)
               Accrued interest                            9,787     9,787
               Other assets and liabilities              (68,272)  (24,073)
                                                         -------   -------
                                                         637,694   696,580
                                                         -------   -------
     Cash flows from investing activities
         Additions to property, plant and equipment     (357,770) (395,637)
         Proceeds from disposition of investments              -    16,690
         Cash received from divestitures                      50     6,838
         Cash paid for acquisitions and licenses         (12,527) (314,730)
         Other investing activities                        1,357    (1,255)
                                                           -----    ------
                                                        (368,890) (688,094)
                                                        --------  --------
     Cash flows from financing activities
         Issuance of notes payable                             -   100,000
         Repayment of notes payable                            -  (100,000)
         Common shares reissued for benefit
          plans, net of tax payments                        (119)   (1,286)
         Common shares repurchased                       (24,283)  (23,146)
         Excess tax benefit from stock awards                  4     1,018
         Payment of debt issuance costs                   (4,416)        -
         Distributions to noncontrolling interests        (5,856)   (9,146)
         Other financing activities                         (236)   (2,851)
                                                            ----    ------
                                                         (34,906)  (35,411)
                                                         -------   -------

     Net increase (decrease) in cash and cash
      equivalents                                        233,898   (26,925)

     Cash and cash equivalents
         Beginning of period                             170,996   204,533
                                                         -------   -------
         End of period                                  $404,894  $177,608
                                                        ========  ========

SOURCE United States Cellular Corporation

Jane W. McCahon, Vice President, Corporate Relations, +1-312-592-5379, jane.mccahon@teldta.com, or Julie D. Mathews, Manager, Investor Relations, +1-312-592-5341, julie.mathews@teldta.com, both of United States Cellular Corporation

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding U.S. Cellular's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.