US Cellular Launches HTC Smartphone

Zacks

United States Cellular Corporation (USM), has announced the launch of HTC One V, and thus became the second telecom carrier in the U.S. to offer the smartphone. We believe this is an attempt by the company to diversify its smartphone portfolio. The HTC One V will be available online and the company’s own store.   

The smartphone is strategically priced at $129.99 dollar with a $100 mail-in-rebate and is $70 less than what rival Sprint-Nextel Corp.s (S) prepaid division Virgin Mobile is offering. Benefits include features like new devices being offered without the hassles of re-signing the contract and a point based reward system which is the first of its kind in this industry. However, a new customer will have to sign a two-year contract and have to pay the activation fees.     

HTC One V is one of the few phones in US Cellular’s stable that runs on Google Inc.’s (GOOG) new android (Ice-Cream Sandwich) platform.      

The phone is launched to keep pace with the increasing demand for newer versions of smartphones. Additionally, the phone will target customers who want to stick to a single device for a considerable span of time. Although the company is slated to launch the very popular Samsung SIII for its high-end customers, we believe that this phone will attract customers who are looking for a good smartphone at a decent price tag.       

The current Zacks Consensus Estimate for United Cellular is pegged at 69 cents for the second quarter with a growth rate estimate of (10.13%). For 2012 and 2013, the Zacks Consensus Estimates stands at $2.04 and $1.78 with growth rate of (1.29%) and (12.89%), respectively.

Recommendation:

We maintain our long-term Neutral recommendation for United States Cellular Corporation. Currently, USM has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

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