United States Cellular Corporation (USM), a subsidiary of Telephone and Data Systems Inc. (TDS) has launched its latest free offering of “Wi-Fi Now” that connects to any Wi-Fi hotspots. In collaboration with California based Wi-Fi Offload Company, Devicescape, U.S. Cellular developed this free application to provide its customers with fast Wi-Fi connectivity and accessibility that can be used anywhere and anytime on their smartphones and tablets.
Apart from Wi-Fi Now, U.S. Cellular offers other value added services to its customers that help them manage their data usage and assess exact data plan for their needs. Over the company’s website, customers may find tools like data estimator, data tracking on My Account that will assist them to analyze their data usage.
Further, the company has also dedicated one web page to help customers monitor data usage. U.S. Cellular also launched data overage alerts, besides its existing free voice and text Overage Protection program.
The company’s product offerings are supported by its advanced high-speed nationwide network that ensures improved wireless experience for its customers.
U.S. Cellular is looking forward to data services expansion by incorporating the 4G LTE technology. In March this year, the company rolled out its first LTE services in Iowa, Wisconsin, Maine, North Carolina, Texas and Oklahoma. Further, it plans to cover an additional 3,600 cities by the second half of the year. Overall, the company expects approximately 54% of its subscriber base under 4G LTE coverage by the year-end.
Going forward, U.S. Cellular completed a spectrum swap with Verizon Communications in September last year that provided U.S. Cellular eighteen 700 MHz spectrum licenses covering eight states- Idaho, Illinois, Indiana, Kansas, Nebraska, Oklahoma, Oregon and Washington. In exchange, the company provided Verizon with two 10MHz PCS licenses covering two states - Illinois and Indiana. Besides supporting the LTE technology, the spectrum swap is expected to enhance network capacity along with improvements in voice and data services in U.S. Cellular’s existing markets.
In order to offer competitive services to customers, the company continues to invest in constructing new cell sites, increasing capacity in existing cell sites and switches, upgrading technology, developing new and enhancing existing office systems, as well as constructing new and remodeling existing retail stores. To support capital intensive network development, U.S. Cellular maintained its capital expenditure projection of approximately $850 million for 2012.
Although these developments would be accretive to the company’s profitability over the long term, we apprehend that heavy capital expenditures may prove detrimental to its financial position in the near term. Furthermore, a competitive market, intense pricing and regulatory pressures can further forestall the company’s near-term profitability.
We have a long-term Neutral recommendation for U.S. Cellular Corporation. Currently, the stock holds a Zacks #3 Rank, implying a short-term Hold rating.
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