U.S. Cellular saw its third-quarter profits fall 60 percent as increased spending and a slump in roaming revenue bit into margins.
The regional carrier’s net income fell to $35.6 million in the third quarter compared to $89.9 million last year, when the company recorded a $16.4 million pre-tax gain on the sale of its investments in Rural Cellular Corporation.
“As expected, operating income declined this quarter, reflecting lower revenues, as well as increased spending in support of multi-year initiatives,” said John Rooney, U.S. Cellular president and CEO, in a statement.
The company also took a hit from a 3 percent dip in service revenues caused mainly by a $24.7 million reduction in inbound roaming revenues related to Verizon’s acquisition of Alltel. Still, ARPU was on the rise, hitting $47.02, and data revenue increased 34 percent to $714.3 million. Data now comprises 18 percent of service revenues.
U.S. Cellular posted mixed numbers in its subscriber results. The company added 8,000 postpaid customers but lost 14,000 customers in its prepaid segment.
The company also promoted its current vice president of sales operations and chief marketing officer, Alan Ferber, to executive vice president of operations. Ferber will be replacing Jay Ellison, who is retiring at the end of 2009.
Ferber has been with U.S. Cellular since 2001 and currently leads the company’s branding, advertising, retail merchandising, product development and sales operations.