U.S. Cellular’s Transition Gamble: Can Asset Sales Offset Mounting Headwinds?

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U.S. Cellular’s Q3 2024 performance reflected progress in cost optimization and strategic realignment but highlighted persistent challenges in top-line growth and competitive pressures. Adjusted EBITDA guidance was raised to $970M–$1.045B, underscoring effective cost controls and operational efficiencies, though adjusted EPS of $0.26 and revenue of $922M missed estimates. Key metrics showed improvement, including a year-over-year reduction of 20,000 in retail net subscriber losses and lower postpaid handset churn, signaling stabilization amid competitive headwinds. Spectrum monetization remains a pivotal strategy, with over $1B in agreements, including sales to Verizon, expected to generate proceeds significantly exceeding the $590M book value. The pending T-Mobile transaction, set for mid-2025, is a transformative move to refocus on higher-margin tower operations, which could benefit from incremental colocation demand as densification trends continue. Fiber expansion supported a 21% rise in adjusted EBITDA, with strong demand for 1-gig+ services, although penetration in new markets remains slower than anticipated. Industry-wide subscriber contraction, inflationary pressures, and subdued wireless capital spending weigh on the outlook, yet YTD free cash flow of $331M (+$94M YoY) and $203M in debt repayment reflect financial discipline. Can U.S. Cellular’s strategic pivot to spectrum monetization and tower growth effectively counter industry-wide pressures and ensure long-term shareholder value?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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