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What changed in ARRAY DIGITAL INFRASTRUCTURE, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ARRAY DIGITAL INFRASTRUCTURE, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+355 added−246 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-16)

Top changes in ARRAY DIGITAL INFRASTRUCTURE, INC.'s 2024 10-K

355 paragraphs added · 246 removed · 209 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDuring 2023, UScellular continued to invest in 5G with a focus on deployment of mid-band spectrum, which will largely overlap portions of areas already covered with low-band 5G service. 5G service deployed over mid-band spectrum will further enhance speed and capacity for UScellular's mobility and fixed wireless services.
Biggest changeDuring 2023 and 2024, UScellular has focused on deploying 5G over its mid-band spectrum, largely overlapping areas already covered with low-band 5G service to enhance speed and capacity for UScellular's mobility and fixed wireless services. As of December 31, 2024, mid-band spectrum is deployed on sites that covered nearly 50% of data and voice traffic.
UScellular has relationships with exclusive and non-exclusive agents (collectively “agents”), which are independent businesses that obtain customers for UScellular on a commission basis. UScellular’s agents are generally in the business of selling wireless devices, wireless service plans and other related products to consumer and business and government customers.
UScellular has relationships with exclusive and non-exclusive agents (collectively “agents”), which are independent businesses that obtain and service customers for UScellular on a commission basis. UScellular’s agents are generally in the business of selling wireless devices, wireless service plans and other related products to consumer and business and government customers.
Sales and Distribution Channels UScellular supports a multi-faceted distribution program, including retail sales, direct sales, telesales, ecommerce, indirect sales including resellers, independent agents and third-party national retailers. Company retail store locations are designed to market wireless services and products to the consumer and small business segments in a setting familiar to these types of customers.
Sales and Distribution Channels UScellular supports a multi-faceted distribution program, including retail sales, direct sales, telesales, ecommerce, and indirect sales including resellers, independent agents and a third-party national retailer. Company retail store locations are designed to market wireless services and products to the consumer and small business segments in a setting familiar to these types of customers.
The map below highlights UScellular’s areas of operations. 1 Table of Contents Operating Strategy and Community Focus UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service and competitive devices, plans and pricing - all provided with a community focus. UScellular operates a regional wireless network.
The map below highlights UScellular’s areas of operations. 1 Table of Contents Operating Strategy, Recent Developments and Community Focus UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service and competitive devices, plans and pricing - all provided with a community focus. UScellular operates a regional wireless network.
A high-quality network, supported by continued investments in that network, is an important factor for UScellular to remain competitive. 5G technology helps address customers’ growing demand for data services and enhances services, including high-speed fixed wireless home internet services, requiring high speed and reliability as well as low latency.
A high-quality network, supported by continued investments in that network, is an important factor for UScellular to remain competitive. 5G technology helps address customers’ growing demand for data services and enhanced services, including high-speed fixed wireless home internet services, requiring high speed and reliability as well as low latency.
UScellular’s interests in wireless spectrum licenses include both direct interests whereby UScellular is the licensee and investment interests in entities which are licensees; together, these direct and investment interests involve operating and non-operating wireless spectrum licenses covering portions of 30 states and a total population of approximately 51 million as of December 31, 2023.
UScellular’s interests in wireless spectrum licenses include both direct interests whereby UScellular is the licensee and investment interests in entities which are licensees; together, these direct and investment interests involve operating and non-operating wireless spectrum licenses covering portions of 30 states and a total population of approximately 51 million as of December 31, 2024.
In 2023, UScellular continued exploring ways to leverage its assets, brand, partnerships, and resources to close the digital divide with a focus on helping to ensure youth in its markets have reliable and fast internet access in school and at home through the After School Access Project .
In 2024, UScellular continued exploring ways to leverage its assets, brand, partnerships, and resources to close the digital divide with a focus on helping to ensure youth in its markets have reliable and fast internet access in school and at home through the After School Access Project .
Local communities are at the center of UScellular’s businesses, and UScellular takes great pride in giving back to the people and places that contribute to its sustainability and long-term success. Company Information UScellular’s website address is www.uscellular.com.
Local communities are at the center of UScellular’s businesses, and UScellular takes great pride in giving back to the people and places that contribute to its sustainability and success. Company Information UScellular’s website address is www.uscellular.com.
UScellular focuses on consumer, business and government customers located in its operating markets. These customers are served primarily through UScellular’s retail stores and digital platform, as well as its direct and indirect sales channels. Services. UScellular provides a wide variety of wireless services accessible on a broad range of devices.
UScellular focuses on consumer, business and government customers located in its operating markets. These customers are served primarily through UScellular’s retail stores and digital platform, as well as its direct and indirect sales channels. 2 Table of Contents Services. UScellular provides a wide variety of wireless services accessible on a broad range of devices.
Further, the Federal Aviation Administration also regulates the siting, lighting and construction of transmitter towers and antennae. Reference is made to Item 7 of this Form 10-K under “Regulatory Matters” for information regarding any other significant recent developments and proposals relating to regulatory matters.
Further, the Federal Aviation Administration also regulates the siting, lighting and construction of transmitter towers and antennae. 4 Table of Contents Reference is made to Item 7 of this Form 10-K under “Regulatory Matters” for information regarding any other significant recent developments and proposals relating to regulatory matters.
In general, there are at least four competitors across UScellular's service area, including to a varying degree: the national wireless companies - Verizon Communications Inc., AT&T Inc., T-Mobile US, Inc., and Dish Network Corporation, cable wireless, including Comcast Corporation and Charter Communications, Inc., and mobile virtual network operators (MVNOs).
In general, there are at least four competitors across UScellular's service area, including to a varying degree: the national wireless companies - Verizon Communications Inc., AT&T Inc., T-Mobile US, Inc., and Dish Network Corporation, cable wireless, which predominantly includes Comcast Corporation and Charter Communications, Inc., and mobile virtual network operators (MVNOs).
Approximately 90% of retail connections were postpaid connections as of December 31, 2023. UScellular offers various service plans with nationwide coverage tailored to the needs of customers.
Approximately 90 % of retail connections were postpaid connections as of December 31, 2024. UScellular offers various service plans with nationwide coverage tailored to the needs of customers.
UScellular offers advanced wireless solutions to consumers and business and government customers including an expansive suite of connected Internet of things (IoT) solutions and software applications across the categories of monitor and control (e.g., sensors and cameras), business automation/operations (e.g., e-forms, office solutions), communication (e.g., enterprise messaging, primary and back-up internet connectivity for business continuity), fleet and asset management, smart water solutions, private cellular networks (PCN) and custom, bespoke end-to-end IoT solutions et al.
UScellular offers advanced wireless solutions to consumers and business and government customers including an expansive suite of connected Internet of things (IoT) solutions and software applications across the categories of monitor and control (e.g., sensors and cameras), business automation/operations (e.g., e-forms, office solutions), communication (e.g., enterprise messaging, unified communications, primary and back-up internet connectivity for business continuity), fleet/asset/video management solutions, security solutions, private cellular networks (PCN) and custom and bespoke end-to-end IoT solutions et al.
Since each of these competitors has access to comparable technology and facilities, competition among wireless service providers for customers is principally on the basis of types of services and products, price, brand, size of area covered, network quality, network speed and responsiveness of customer service.
Since each of these competitors has access to comparable technology and facilities, competition among wireless service providers for customers is principally on the basis of types of services and products offered, price, brand, network quality, network speed and responsiveness of customer service.
UScellular also operates a VoLTE network, which allows customers to utilize a 4G LTE enabled mobile device for voice and data services, including high-definition voice and simultaneous voice and data sessions. As a result of its continued investment and modernization of its network, UScellular decommissioned its third-generation (3G) CDMA network in the first quarter of 2024. Roaming.
UScellular also operates a 4G LTE network including VoLTE technology, which allows customers to utilize a 4G LTE enabled mobile device for voice and data services, including high-definition voice and simultaneous voice and data sessions. UScellular decommissioned its third-generation (3G) CDMA network in the first quarter of 2024. Roaming.
UScellular offers a comprehensive range of devices such as smartphones and other handsets, tablets, wearables, mobile hotspots, fixed wireless home internet, and IoT devices. In addition, UScellular also offers a wide range of accessories, including wireless essentials such as cases, screen protectors, chargers, memory cards and consumer electronics such as audio, home automation and networking products.
UScellular offers a comprehensive range of devices such as smartphones and other handsets, tablets, wearables, mobile hotspots, fixed wireless home internet, and IoT devices. In addition, UScellular also offers a wide range of accessories, including wireless essentials such as cases, screen protectors, cables, chargers, memory cards and consumer electronics such as Bluetooth audio, wi-fi enabled cameras, and networking products.
UScellular manages relationships with its suppliers to ensure its customers have access to the industry's latest devices, to obtain best possible pricing, and to identify opportunities for promotional support from its suppliers. UScellular contracts with third-party providers for the majority of its product warehousing, distribution and direct customer fulfillment activities.
UScellular manages relationships with its suppliers to ensure its customers have access to the industry's latest devices, to obtain best possible pricing, and to identify opportunities for promotional support from its suppliers. UScellular contracts with third-party providers for its product warehousing, distribution and direct customer fulfillment activities. UScellular also contracts with third-party providers for its device service programs. Seasonality.
Human Capital Resources Company and Culture UScellular had approximately 4,300 full-time and part-time associates as of December 31, 2023. The culture at UScellular is based upon the fundamental belief that UScellular’s long-term success is inextricably tied to associate engagement and high ethical standards.
Human Capital Resources Company and Culture UScellular had approxima tely 4,100 full-time and part-time associates as of December 31, 2024. The culture at UScellular is based upon the fundamental belief that UScellular’s success is inextricably tied to associate engagement and high ethical standards.
UScellular supports mobility and fixed wireless services through a combination of low-band, mid-band and high-band spectrum. UScellular's initial 5G deployment has predominantly used low-band spectrum to launch 5G services in portions of substantially all its markets.
UScellular supports mobility and fixed wireless services through a combination of low-band, mid-band and high-band spectrum. In 2019-2023, UScellular focused on 5G coverage and predominantly used low-band spectrum to launch 5G services in portions of substantially all of its markets.
UScellular also contracts with third-party providers for its device service programs. Seasonality. Seasonality in operating expenses may cause operating income to vary from quarter to quarter. UScellular’s operating expenses tend to be higher in the fourth quarter due to increased marketing and promotional activities during the holiday season.
Seasonality in operating expenses may cause operating income to vary from quarter to quarter. UScellular’s operating expenses tend to be higher in the fourth quarter due to increased marketing and promotional activities during the holiday season.
Item 1. Business General United States Cellular Corporation (UScellular) provides wireless telecommunications services to customers with 4.6 million retail connections in portions of 21 states collectively representing a total population of 32 million. UScellular operates in one reportable segment, and all of its wireless operating markets are in the United States.
Item 1. Business General United States Cellular Corporation (UScellular) provides wireless telecommunications services to customers with 4.4 million retail connections in portions of 21 states collectively representing a total population of 33 million.
The construction, operation and transfer of wireless systems in the United States are regulated to varying degrees by the FCC pursuant to the Communications Act of 1934, as amended (Communications Act).
Regulation UScellular’s operations are subject to federal, state and local regulation. Key regulatory considerations are discussed below. The construction, operation and transfer of wireless systems in the United States are regulated to varying degrees by the FCC pursuant to the Communications Act of 1934, as amended (Communications Act).
UScellular is a majority-owned subsidiary of Telephone and Data Systems, Inc. As of December 31, 2023, TDS owns 83% of UScellular’s Common Shares, has the voting power to elect all of the directors of UScellular and controls 96% of the voting power in matters other than the election of directors of UScellular.
As of December 31, 2024, TDS owns 83% of UScellular’s Common Shares, has the voting power to elect all of the directors of UScellular and controls 96% of the voting power in matters other than the electi on of directors of UScellular.
On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular. At this time, UScellular cannot predict the ultimate outcome of such process or estimate the potential impact of such process on the financial statements.
On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
UScellular allows customers to purchase certain devices and accessories on installment plans, allowing for customers to pay over a specified period of time. 2 Table of Contents UScellular also offers services that enable customers to replace or repair their devices, including the Device Protection+ program, which provides as soon as next-day delivery of a replacement device for damaged, lost and stolen devices, and AppleCare services for Apple iOS customers.
UScellular also offers services that enable customers to replace or repair their devices, including the Device Protection+ program, which provides as soon as next-day delivery of a replacement device for damaged, lost and stolen devices, and AppleCare services for Apple iOS customers. UScellular's Device Protection+ Advanced program also includes local or on-demand repair for eligible devices.
UScellular has entered into roaming agreements with a number of wireless companies so that it can offer its customers nationwide services, including 4G LTE, VoLTE and 5G, as well as a variety of international roaming options. 3 Table of Contents Towers. UScellular owns and leases cell towers to provide service to its customers throughout its footprint.
Inter-carrier roaming agreements are negotiated between wireless operators to enable customers to use wireless services outside of their home service area. UScellular has entered into roaming agreements with a number of wireless companies so that it can offer its customers nationwide services, including 4G LTE, VoLTE and 5G, as well as a variety of international roaming options. Towers.
The business organization also offers a suite of professional and managed services. Lastly, for first responders, UScellular offers a suite of critical connectivity solutions that includes Wireless Priority Services (WPS) and Quality Priority and Preemption (QPP) options. UScellular intends to continue to further enhance these offerings in 2024 and beyond. Products.
The business organization also offers an extensive selection of professional and managed services including staff augmentation, IPX services, and SIM management. Lastly, for first responders, UScellular offers a suite of critical connectivity solutions that includes Wireless Priority Services (WPS) and Quality Priority and Preemption (QPP) options. Products.
Training Since its founding, UScellular has been committed to associate development, including for emerging and existing leaders, which is critical to its success.
UScellular endeavors to encourage a broad range of thoughts, ideas and the innovation needed to move the business forward. Training Since its founding, UScellular has been committed to associate development, including for emerging and existing leaders, which is critical to its success.
UScellular provides support and training to its agents to increase customer satisfaction and to ensure a consistent customer experience. To expand its retail presence, UScellular also maintains a relationship with a large national retailer, selling postpaid and prepaid devices. Competition The wireless telecommunication industry is highly competitive. UScellular competes directly with several wireless service providers in each of its markets.
UScellular also maintains a relationship with a large national retailer, selling postpaid and prepaid devices and similar to the agents, this national retailer obtains and services UScellular postpaid and prepaid customers on a commission basis. 3 Table of Contents Competition The wireless telecommunication industry is highly competitive. UScellular competes directly with several wireless service providers in each of its markets.
UScellular's Device Protection+ Advanced program also includes local or on-demand repair for eligible devices. In addition, UScellular offers a Trade-In program through which UScellular buys customers' used equipment. UScellular purchases devices and accessory products from a number of original equipment manufacturers and distributors.
In addition, UScellular offers a Trade-In program through which UScellular acquires customers' used equipment in exchange for promotional or bill credit. UScellular purchases devices and accessory products from a number of original equipment manufacturers and distributors.
As part of its business development strategy, UScellular may periodically be engaged in negotiations relating to strategic partnerships and/or the acquisition, exchange or disposition of companies, strategic properties, and investment interests. Additionally, UScellular may be engaged in negotiations related to wireless spectrum, including participation in Federal Communications Commission (FCC) auctions.
As part of its business development strategy, UScellular may periodically be engaged in negotiations relating to strategic partnerships and/or the acquisition, exchange or disposition of companies, strategic properties, spectrum licenses and/or investment interests. UScellular has a longstanding commitment to supporting its local communities through donations and volunteerism.
UScellular provides job specific, diversity and inclusion, safety, and fraud awareness training for all associates – and also offers programs that further develop its associates including educational assistance, developmental assignments, and mentoring programs. 4 Table of Contents Community UScellular is committed to supporting and enhancing the communities it serves through local and philanthropic initiatives that enrich the lives of those living where it operates and where its associates live, work and play.
Community UScellular is committed to supporting and enhancing the communities it serves through local and philanthropic initiatives that enrich the lives of those living where it operates and where its associates live, work and play.
Additionally, UScellular sponsors Associate Resource Groups to promote dynamic community experiences that align with UScellular’s vision and values, increase associate engagement and empowerment, and support professional development. UScellular endeavors to encourage a broad diversity of thoughts, ideas and the innovation needed to move the business forward.
UScellular periodically surveys its associates to understand the level of associate engagement and overall job satisfaction. UScellular sponsors Associate Resource Groups, open to all associates, to promote dynamic community experiences that align with UScellular's vision and values, increase associate engagement and empowerment, and support professional development.
UScellular receives tower rental revenues when another carrier leases tower space on a UScellular owned tower. As of December 31, 2023, there were 7,000 cell sites in service of which UScellular owned 4,373. Regulation UScellular’s operations are subject to federal, state and local regulation. Key regulatory considerations are discussed below.
UScellular owns and leases cell towers to provide service to its customers throughout its footprint. UScellular receives tower rental revenues when another carrier leas es tower space on a UScellular owned tower. As of December 31, 2024, there were 7,010 cell sites in service of which UScellular owned 4,409 .
Options include an in-home self-installed device, a self-installation device mounted on the external side of a window, and externally-mounted professionally-installed equipment with an internal router. In addition to selling direct to businesses and residential homes, UScellular works with several municipalities to bring broadband internet to underserved communities.
Options include an in-home self-installed device and a self-installation device mounted on the external side of a window.
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The FCC has historically conducted auctions through which additional spectrum is made available for the provision of wireless services. Historically, UScellular has participated in certain FCC auctions both directly and indirectly through its limited partnership interests. UScellular has a longstanding commitment to supporting its local communities through donations and volunteerism.
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During the second quarter of 2024, UScellular modified its reporting structure due to the planned disposal of its wireless operations and, as a result, disaggregated its operations into two reportable segments – Wireless and Towers. All of its operating markets are in the United States. UScellular is a majority-owned subsidiary of Telephone and Data Systems, Inc.
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Inter-carrier roaming agreements are negotiated between wireless operators to enable customers to use wireless services outside of their home service area.
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UScellular owns and operates towers which support UScellular's wireless network. UScellular also leases space on its owned towers to other wireless service providers. As of December 31, 2024, UScellular owned 4,409 towers with 2,444 third-party colocations.
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UScellular regularly surveys its associates - those surveys have consistently shown that associates have strong engagement and high overall job satisfaction. Diversity, Equity, and Inclusion UScellular wants each associate to make a meaningful contribution and leverages diversity and inclusion efforts to harness the talent and potential of its associates.
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On May 28, 2024, UScellular announced that its Board of Directors unanimously approved the execution of a Securities Purchase Agreement (Securities Purchase Agreement) by and among TDS, UScellular, T-Mobile US, Inc.
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These efforts strive to value and connect diverse people and perspectives, amplify their voices, and enable business performance through strategic collaboration. UScellular is committed to demonstrating equity and fairness through the inclusion of diverse associates, customers, and suppliers.
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(T-Mobile) and USCC Wireless Holdings, LLC, pursuant to which, among other things, UScellular agreed to sell its wireless operations and select spectrum assets to T-Mobile for a purchase price, subject to adjustments, as specified in the Securities Purchase Agreement, of $4,400 million, which is payable in a combination of cash and the assumption of up to approximately $2,000 million in debt.
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The purchase price includes $100 million contingent on the satisfaction of certain financial and operational metrics. The purchase price also includes $400 million allocated to certain wireless spectrum licenses held by entities in which UScellular is a non-controlling limited partner.
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The closing with respect to these wireless spectrum licenses is contingent upon UScellular's purchase, which is pending receipt of regulatory approval, of the remaining equity in the entities that UScellular does not currently own.
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The Securities Purchase Agreement also contemplates, among other things, a Short-Term Spectrum Manager Lease Agreement and Short-Term Spectrum Manager Sublease Agreements that will become effective at the closing date, which provide T-Mobile with an exclusive license to use certain UScellular spectrum assets and leases at no cost for up to one-year for the sole purpose of providing continued, uninterrupted service to customers.
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The sale of the wireless business to T-Mobile is expected to close in mid-2025, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions. On October 17, 2024, UScellular, and certain subsidiaries of UScellular, entered into a License Purchase Agreement (Verizon Purchase Agreement) with Verizon Communications Inc.
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(Verizon) to sell certain AWS, Cellular and PCS wireless spectrum licenses and agreed to grant Verizon certain rights to lease such licenses prior to the transaction close for total proceeds of $1,0 00 million. As of December 31, 2024, the book value of the wireless spectrum licenses to be sold was $586 million .
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The transaction is subject to regulatory approval and other customary closing conditions, and is contingent on the closing of the T-Mobile transaction and the termination of the T-Mobile Short-Term Spectrum Manager Lease Agreement.
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On November 6, 2024, UScellular, and certain subsidiaries of UScellular, entered into a License Purchase Agreement (AT&T Purchase Agreement) with New Cingular Wireless PCS, LLC (AT&T), a subsidiary of AT&T Inc., to sell certain 3.45 GHz and 700 MHz wireless spectrum licenses and agreed to grant AT&T certain rights to lease and sub-lease such licenses prior to the transaction close for total proceeds of $1,018 million, subject to certain purchase price adjustments.
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As of December 31, 2024 , the book value of the wireless spectrum licenses to be sold was $859 million. The transaction is subject to regulatory approval and other customary closing conditions and substantially all of the licenses subject to the transaction are contingent on the closing of the T-Mobile transaction.
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The purchase price includes $232 million allocated to certain wireless spectrum licenses that are held by an entity in which UScellular is a non-controlling limited partner. The closing with respect to these wireless spectrum licenses is contingent upon UScellular's purchase, which is pending receipt of regulatory approval, of the remaining equity in the entity that UScellular does not currently own.
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The strategic alternatives review process is ongoing as UScellular works toward closing the transactions signed during 2024, including the T-Mobile, Verizon and AT&T transactions and continues to seek to opportunistically monetize its spectrum assets that are not subject to the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement.
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UScellular allows customers to purchase certain devices and accessories on installment plans, allowing for customers to pay over a specified period of time.
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UScellular provides support and training to its agents to increase customer satisfaction and to ensure a consistent customer experience.
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UScellular provides job specific, safety, and fraud awareness training for all associates – and also offers programs that further develop its associates including educational assistance, developmental assignments, and mentoring programs.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+43 added−6 removed112 unchanged
Biggest changeFailure to successfully deploy new technologies, including 5G, and/or build-out and enhance UScellular’s network, support facilities and other systems and infrastructure in a cost-effective manner, and in a manner that satisfies consumers' expectations for quality and coverage, could have an adverse effect on UScellular’s business, business prospects, financial condition or results of operations. 11) Difficulties involving third parties with which UScellular does business, including changes in UScellular's relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market UScellular’s services, could adversely affect UScellular's business, financial condition or results of operations.
Biggest changeFailure to successfully deploy new technologies, including the continued deployment of 5G, and/or build-out and enhance UScellular’s network, support facilities and other systems and infrastructure in a cost-effective manner, and in a manner that satisfies consumers' expectations for quality and coverage, has adversely affected and could continue to adversely affect UScellular’s business, business prospects, financial condition or results of operations. 5) Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect UScellular’s revenues or increase its costs to compete.
Insufficient cash flows from operating activities, changes in UScellular's credit ratings, defaults of the terms of debt or credit agreements, uncertainty of access to capital, deterioration in the capital markets, reduced regulatory capital at banks which in turn limits their ability to lend, other changes in the performance of UScellular or in market conditions or other factors could limit or restrict the availability of financing on terms and prices acceptable to UScellular, which could require UScellular to reduce its acquisition, capital expenditure and business development programs, reduce the acquisition and development of wireless spectrum licenses, divest assets and/or reduce or cease share repurchases.
Insufficient cash flows from operating activities, changes in UScellular's credit ratings, defaults of the terms of debt or credit agreements, uncertainty of access to capital, deterioration in the capital markets, reduced regulatory capital at banks which in turn limits their ability to lend, other changes in the performance of UScellular or in market conditions or other factors could limit or restrict the availability of financing on terms and prices acceptable to UScellular, which could require UScellular to reduce its capital expenditure, acquisition and business development programs, reduce the development of wireless spectrum licenses, divest assets and/or reduce or cease share repurchases.
Losses in the values of such investments or a reduction in income from these investments could adversely affect UScellular’s financial condition or results of operations. In addition, certain investments have historically contributed significant cash flows to UScellular and a reduction or suspension of such cash flows could adversely affect UScellular’s financial condition.
Losses in the values of such investments or a reduction in income from these investments could adversely affect UScellular’s financial condition or results of operations. In addition, certain investments have historically contributed significant cash flows to UScellular and a reduction or suspension of such cash flows could adversely affect UScellular’s cash flows and financial condition.
These transactions commonly involve a number of risks, including: ▪ Identification of attractive companies, businesses, properties, spectrum or other assets for acquisition or exchange, and/or the selection of UScellular’s businesses or assets for divestiture or exchange; ▪ Competition for acquisition targets and the ability to acquire or exchange businesses at reasonable prices; ▪ Inability to make acquisitions that would achieve sufficient scale or substantial benefit to be competitive with competitors with greater scale; ▪ Possible lack of buyers for businesses or assets that UScellular desires to divest and the ability to divest or exchange such businesses or assets at reasonable prices; ▪ Ability to negotiate favorable terms and conditions for acquisitions, divestitures and exchanges; 9 Table of Contents ▪ Significant expenditures associated with acquisitions, divestitures and exchanges; ▪ Risks associated with integrating new businesses or markets, including risks relating to cybersecurity and privacy; ▪ Ability to enter markets in which UScellular has limited or no direct prior experience and competitors have stronger positions; ▪ Ability to integrate and manage businesses that are engaged in activities other than traditional wireless service; ▪ Uncertain revenues and expenses associated with acquisitions, with the result that UScellular may not realize the growth in revenues, anticipated cost structure, profitability, or return on investment that it expects; ▪ Difficulty of integrating the technologies, services, products, operations and personnel of the acquired businesses, or of separating such matters for divested businesses or assets; ▪ Diversion of management’s attention; ▪ Disruption of ongoing business; ▪ Impact on UScellular’s cash and available credit lines for use in financing future growth and working capital needs; ▪ Inability to retain key personnel; ▪ Inability to successfully incorporate acquired assets and rights into UScellular’s service offerings; ▪ Inability to utilize acquired wireless spectrum; ▪ Inability to maintain uniform standards, controls, procedures and policies; ▪ Possible conditions to approval by the FCC, the Federal Trade Commission and/or the Department of Justice; and ▪ Impairment of relationships with employees, customers or vendors.
These transactions commonly involve a number of risks, including: ▪ Identification of attractive companies, businesses, properties, spectrum or other assets for acquisition or exchange, and/or the selection of UScellular’s businesses or assets for divestiture or exchange; ▪ Competition for acquisition targets and the ability to acquire or exchange businesses at reasonable prices; ▪ Inability to make acquisitions that would achieve sufficient scale or substantial benefit to be competitive with competitors with greater scale; ▪ Possible lack of buyers for businesses or assets that UScellular desires to divest and the ability to divest or exchange such businesses or assets at reasonable prices; ▪ Ability to negotiate favorable terms and conditions for acquisitions, divestitures and exchanges; ▪ Significant expenditures associated with acquisitions, divestitures and exchanges; ▪ Risks associated with integrating new businesses or markets, including risks relating to cybersecurity and privacy; ▪ Ability to enter markets in which UScellular has limited or no direct prior experience and competitors have stronger positions; ▪ Ability to integrate and manage businesses that are engaged in activities other than traditional wireless service; ▪ Uncertain revenues and expenses associated with acquisitions, with the result that UScellular may not realize the growth in revenues, anticipated cost structure, profitability, or return on investment that it expects; ▪ Difficulty of integrating the technologies, services, products, operations and personnel of the acquired businesses, or of separating such matters for divested businesses or assets; ▪ Diversion of management’s attention; ▪ Disruption of ongoing business; ▪ Impact on UScellular’s cash and available credit lines for use in financing future growth and working capital needs; ▪ Inability to retain key personnel; ▪ Inability to successfully incorporate acquired assets and rights into UScellular’s service offerings; ▪ Inability to utilize acquired wireless spectrum; ▪ Inability to maintain uniform standards, controls, procedures and policies; ▪ Possible conditions to approval by the FCC, the Federal Trade Commission and/or the Department of Justice; and ▪ Impairment of relationships with employees, customers or vendors.
The loss of existing key personnel due to competition, wage levels and/or retirements, the failure to recruit highly skilled and diverse personnel in a timely and cost-effective manner, the inability to foster and maintain a diverse and inclusive work environment, or failure to maintain its commitment to environmental and social responsibility could have an adverse effect on UScellular’s business, financial condition or results of operations.
The loss of existing key personnel due to competition, wage levels and/or retirements, the failure to recruit highly skilled personnel in a timely and cost-effective manner, the inability to foster and maintain an inclusive work environment, or failure to maintain its commitment to environmental and social responsibility could have an adverse effect on UScellular’s business, financial condition or results of operations.
UScellular could fail to obtain access to sufficient spectrum capacity, including spectrum needed to support 5G and future technologies, in new or existing markets, whether through FCC auctions or other transactions, to meet the anticipated spectrum requirements associated with increased demand for existing services, especially increases in customer demand for data services and network speed, and to enable deployment of next-generation services.
UScellular could fail to obtain access to sufficient spectrum capacity, including spectrum needed to support future technologies, in new or existing markets, whether through FCC auctions or other transactions, to meet the anticipated spectrum requirements associated with increased demand for existing services, especially increases in customer demand for data services and network speed, and to enable deployment of next-generation services.
These include cyber-attacks intended to wrongfully obtain private and valuable information, or cause other types of malicious events, including denial of service attacks which may cause UScellular's services to be disrupted or unavailable to customers. The increased number of associates working remotely increases risks associated with data handling and vulnerability management.
These include cyber-attacks intended to wrongfully obtain private and valuable information, or cause other types of malicious events, including denial of service attacks which may cause UScellular's services to be disrupted or unavailable to customers. The number of associates working remotely increases risks associated with data handling and vulnerability management.
Operational problems associated with such functions, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, including possible cyber-attacks or other breaches of network or information technology security, data protection or privacy, could have adverse effects on UScellular’s business, financial condition or results of operations. 12) A failure by UScellular to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on UScellular’s business, financial condition or results of operations.
Operational problems associated with such functions, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, including possible cyber-attacks or other breaches of network or information technology security, data protection or privacy, could have adverse effects on UScellular’s business, financial condition or results of operations. 15) A failure by UScellular to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on UScellular’s business, financial condition or results of operations.
Cybersecurity of this Form 10-K for additional information. 26) Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede UScellular’s access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on UScellular’s business, financial condition or results of operations.
Cybersecurity of this Form 10-K for additional information. 28) Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede UScellular’s access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on UScellular’s business, financial condition or results of operations.
Such Preferred Shares could be issued in circumstances that would serve to preserve TDS’ control of UScellular. 15 Table of Contents The provisions of the UScellular Restated Certificate of Incorporation and the existence of different classes of capital stock and voting rights could result in the exclusion of UScellular Common Shares from certain major stock indices at some point in the future, unless UScellular is grandfathered by such stock indices or qualifies for some other exception.
Such Preferred Shares could be issued in circumstances that would serve to preserve TDS’ control of UScellular. 17 Table of Contents The provisions of the UScellular Restated Certificate of Incorporation and the existence of different classes of capital stock and voting rights could result in the exclusion of UScellular Common Shares from certain major stock indices at some point in the future, unless UScellular is grandfathered by such stock indices or qualifies for some other exception.
This presents a risk to UScellular in that, to the extent UScellular is not able to enter into economically viable roaming arrangements with these other carriers, this could impact UScellular’s ability to service its customers in geographic areas where UScellular does not have its own network. 3) An inability to attract diverse people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on UScellular's business, financial condition or results of operations.
This presents a risk to UScellular in that, to the extent UScellular is not able to enter into economically viable roaming arrangements with these other carriers, this could impact UScellular’s ability to service its customers in geographic areas where UScellular does not have its own network. 8) An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on UScellular's business, financial condition or results of operations.
If customer demand for these new services, products and solutions does not develop as expected, UScellular’s business, financial condition or results of operations could be adversely affected. 9) Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular’s business could have an adverse effect on UScellular’s business, financial condition or results of operations.
If customer demand for these new services, products and solutions does not develop as expected, UScellular’s business, financial condition or results of operations could be adversely affected. 13) Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular’s business could have an adverse effect on UScellular’s business, financial condition or results of operations.
However, UScellular may not be able to acquire sufficient spectrum through these types of transactions, and UScellular may not be able to complete any of these transactions on favorable terms. 7) Advances or changes in technology could render certain technologies used by UScellular obsolete, could put UScellular at a competitive disadvantage, could reduce UScellular’s revenues or could increase its costs of doing business.
However, UScellular may not be able to acquire sufficient spectrum through these types of transactions, and UScellular may not be able to complete any of these transactions on favorable terms. 11) Advances or changes in technology could render certain technologies used by UScellular obsolete, could put UScellular at a competitive disadvantage, could reduce UScellular’s revenues or could increase its costs of doing business.
UScellular may not be able to respond to such changes and implement new technology on a timely or cost-effective basis, which could reduce its revenues or increase its costs of doing business. 8) Complexities associated with deploying new technologies present substantial risk and UScellular investments in unproven technologies may not produce the benefits that UScellular expects.
UScellular may not be able to respond to such changes and implement new technology on a timely or cost-effective basis, which could reduce its revenues or increase its costs of doing business. 12) Complexities associated with deploying new technologies present substantial risk and UScellular investments in unproven technologies may not produce the benefits that UScellular expects.
The extent of the impact of public health emergencies on UScellular's business, financial condition and results of operations will depend on the severity and duration of the emergency, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted. 16 Table of Contents Item 1B. Unresolved Staff Comments None.
The extent of the impact of public health emergencies on UScellular's business, financial condition and results of operations will depend on the severity and duration of the emergency, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted. 18 Table of Contents Item 1B. Unresolved Staff Comments None.
To the extent that TDS' credit rating is downgraded, it may adversely affect UScellular's credit rating, which could result in the impacts described above. 14) UScellular has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.
To the extent that TDS' credit rating is downgraded, it may adversely affect UScellular's credit rating, which could result in the impacts described above. 17) UScellular has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.
Changes in economic conditions, changes in financial markets, changes in U.S. trade policies, deterioration in the capital markets or other factors could have an adverse effect on UScellular’s business, financial condition, revenues, results of operations and cash flows. 27) The impact of public health emergencies on UScellular's business is uncertain, but depending on duration and severity could have a material adverse effect on UScellular's business, financial condition or results of operations.
Changes in economic conditions, changes in financial markets, changes in U.S. trade policies, deterioration in the capital markets or other factors could have an adverse effect on UScellular’s business, financial condition, revenues, results of operations and cash flows. 29) The impact of public health emergencies on UScellular's business is uncertain, but depending on duration and severity could have a material adverse effect on UScellular's business, financial condition or results of operations.
Furthermore, consolidation among key suppliers may result in less competition, higher prices, the discontinuation of equipment and/or services typically purchased by UScellular or the discontinuation of support for equipment owned by UScellular. 10 Table of Contents Operation of UScellular’s supply chain and management of its device inventory and network equipment require accurate forecasting of customer growth and demand.
Furthermore, consolidation among key suppliers may result in less competition, higher prices, the discontinuation of equipment and/or services typically purchased by UScellular or the discontinuation of support for equipment owned by UScellular. 12 Table of Contents Operation of UScellular’s supply chain and management of its device inventory and network equipment require accurate forecasting of customer growth and demand.
As a result, UScellular’s level of indebtedness, restrictions contained in debt instruments and/or possible breaches of covenants, defaults, and acceleration of indebtedness could have an adverse effect on UScellular’s business, financial condition, revenues, results of operations and cash flows. 15) UScellular’s assets and revenue are concentrated in the U.S. wireless telecommunications industry.
As a result, UScellular’s level of indebtedness, restrictions contained in debt instruments and/or possible breaches of covenants, defaults, and acceleration of indebtedness could have an adverse effect on UScellular’s business, financial condition, revenues, results of operations and cash flows. 18) UScellular’s assets and revenue are concentrated in the U.S. wireless telecommunications industry.
Telecommunications companies may be designated by states, or in some cases by the FCC, as an Eligible Telecommunications Carrier (ETC) to receive universal service support payments if they provide specified services in “high-cost” areas. UScellular has been designated as an ETC in certain states and received $92 million in high-cost support for service to high-cost areas in 2023.
Telecommunications companies may be designated by states, or in some cases by the FCC, as an Eligible Telecommunications Carrier (ETC) to receive universal service support payments if they provide specified services in “high-cost” areas. UScellular has been designated as an ETC in certain states and received $92 million in high-cost support for service to high-cost areas in 2024 .
TDS has no obligation to consent to any business opportunities proposed by UScellular and may withhold its consent in its own best interests. 24) Certain matters, such as control by TDS and provisions in the UScellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of UScellular or have other consequences.
TDS has no obligation to consent to any business opportunities proposed by UScellular and may withhold its consent in its own best interests. 26) Certain matters, such as control by TDS and provisions in the UScellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of UScellular or have other consequences.
General Risk Factors 25) UScellular has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on UScellular's business, financial condition or results of operations. UScellular experiences cyber-attacks of varying degrees on a regular basis.
General Risk Factors 27) UScellular has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on UScellular's business, financial condition or results of operations. UScellular experiences cyber-attacks of varying degrees on a regular basis.
If UScellular cannot keep pace with its competitors in deploying 5G or other comparable offerings, or if UScellular's deployment of 5G technology does not result in significant incremental revenues, UScellular's financial condition, results of operations and ability to do business could continue to be adversely affected.
If UScellular continues to not keep pace with its competitors in deploying 5G or other comparable offerings, or if UScellular's deployment of 5G technology does not result in significant incremental revenues, UScellular's financial condition, results of operations and ability to do business could continue to be adversely affected.
These or other developments at TDS may negatively affect UScellular's ability to obtain short or long-term financing on acceptable terms or obtain favorable terms and conditions from third-party vendors. 11 Table of Contents UScellular’s credit rating currently is sub-investment grade.
These or other developments at TDS may negatively affect UScellular's ability to obtain short or long-term financing on acceptable terms or obtain favorable terms and conditions from third-party vendors. 13 Table of Contents UScellular’s credit rating currently is sub-investment grade.
Any claims of infringement of intellectual property and proprietary rights of others could prevent UScellular from using necessary technology to provide its services or subject UScellular to expensive intellectual property litigation or monetary penalties. 23) There are potential conflicts of interests between TDS and UScellular.
Any claims of infringement of intellectual property and proprietary rights of others could prevent UScellular from using necessary technology to provide its services or subject UScellular to expensive intellectual property litigation or monetary penalties. 25) There are potential conflicts of interests between TDS and UScellular.
UScellular has incurred negative free cash flow (defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and less Cash paid for software license agreements) at times in the past and this could occur in the future.
UScellular has incurred negative free cash flow (defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and less Cash paid for software license agreements) at times in past periods, and this could occur in future periods.
These factors include, but are not limited to: ▪ Demand for or usage of services, particularly data services; ▪ Demand for leasing space on a tower; ▪ Consumer preferences, including type of wireless devices; ▪ Consumer perceptions of network quality and performance; ▪ Consumer expectations for self-service options through digital means; ▪ Competitive pressure to deliver higher speed; ▪ Competitive pressure from promotional activity; ▪ The pricing of services, including an increase in price-based competition; ▪ The pricing of tower leases that can be charged to third parties; ▪ Inflationary pressures on costs without corresponding price increases for UScellular's services; ▪ The overall size and growth rate of UScellular’s customer base; ▪ Penetration rates; ▪ Churn rates; ▪ Selling expenses; ▪ Net customer acquisition and retention costs; ▪ Customers’ ability to pay for wireless service and the potential impact on bad debts expense; ▪ Roaming agreements and rates; ▪ Third-party vendor support; ▪ Capacity constraints; ▪ The mix of services and products offered by UScellular and purchased by customers; and ▪ The costs of providing services and products. 6) A failure by UScellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on UScellular’s business, financial condition or results of operations.
These factors include, but are not limited to: ▪ Demand for or usage of services, particularly data services; ▪ Demand for leasing space on a tower; ▪ Consumer preferences, including type of wireless devices; ▪ Consumer perceptions of network quality and performance; ▪ Consumer expectations for self-service options through digital means; ▪ Competitive pressure to deliver higher speed; ▪ Competitive pressure from promotional activity; ▪ The pricing of services, including an increase in price-based competition; ▪ The pricing of tower leases that can be charged to third parties; ▪ Increases in ground lease rates for owned towers; ▪ Inflationary pressures on costs without corresponding price increases for UScellular's services; ▪ The overall size and growth rate of UScellular’s customer base; ▪ Penetration rates; ▪ Churn rates; ▪ Selling expenses; ▪ Net customer acquisition and retention costs; ▪ Customers’ ability to pay for wireless service and the potential impact on bad debts expense; ▪ Roaming agreements and rates; ▪ Third-party vendor support; ▪ Capacity constraints; ▪ The mix of services and products offered by UScellular and purchased by customers; and ▪ The costs of providing services and products. 10 Table of Contents 10) A failure by UScellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on UScellular’s business, financial condition or results of operations.
If UScellular fails to effectively deploy new wireless technologies, services or products on a timely basis, this could have an adverse impact on UScellular’s business, financial condition and results of operations. Furthermore, it is not certain that UScellular’s investments in various new, unproven technologies and the related service and product offerings will be effective.
If UScellular fails to effectively deploy new wireless technologies, services or products on a timely basis, this could have an adverse impact on UScellular’s business, financial condition and results of operations. 11 Table of Contents Furthermore, it is not certain that UScellular’s investments in various new, unproven technologies and the related service and product offerings will be effective.
UScellular’s focus on the U.S. wireless telecommunications industry, together with its sub-scale position relative to larger competitors with greater resources within the industry, may represent increased risk for investors due to the lack of diversification.
UScellular’s focus on the U.S. wireless telecommunications industry, together with its lack of scale relative to larger competitors with greater resources within the industry, may represent increased risk for investors due to the lack of diversification.
These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries. 14 Table of Contents 22) Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent UScellular from using necessary technology to provide products or services or subject UScellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on UScellular’s business, financial condition or results of operations.
These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries. 16 Table of Contents 24) Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent UScellular from using necessary technology to provide products or services or subject UScellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on UScellular’s business, financial condition or results of operations.
This could result in lost sales opportunities or an excess supply of device inventory or network equipment that may need to be written down, depreciated, or disposed of for a loss.
This could result in lost sales opportunities or an excess supply of device inventory that may need to be written down, depreciated, or disposed of for a loss.
Specifically, UScellular’s smaller scale relative to most of its competitors could have the following impacts, among others: ▪ Low profit margins and returns on investment that are below UScellular’s cost of capital; ▪ Increased operating and capital expenditure costs due to lack of leverage with vendors; ▪ Inability to timely and successfully deploy 5G or other wireless technologies, or to realize significant incremental revenues from their deployment; 7 Table of Contents ▪ Limited opportunities for strategic partnerships as potential partners are focused on telecommunications companies with greater scale and scope; ▪ Limited opportunities for bundling wireless service with other services such as home internet; ▪ Limited access to content, as well as limited ability to obtain acceptably priced content; ▪ Limited access to devices as larger competitors enter into exclusive device arrangements; ▪ Consumer expectations that UScellular provides lower-priced offerings relative to larger competitors; ▪ Limited ability to influence industry standards; ▪ Limited ability to acquire or build additional towers; ▪ Reduced ability to invest in research and development of new services and products; ▪ Lower risk tolerance when evaluating new markets; ▪ Vendors may deem UScellular non-strategic and not develop or sell services and products to UScellular, particularly where technical requirements differ from those of larger companies; ▪ Limited access to intellectual property; and ▪ Other limited opportunities such as for software development or third-party distribution.
Specifically, UScellular’s lack of scale and structural disadvantages relative to most of its competitors could have the following impacts, among others: ▪ Low profit margins and returns on investment that are below UScellular’s cost of capital; ▪ Increased operating and capital expenditure costs due to lack of leverage with vendors and dispersed geography; ▪ Higher costs per wireless subscriber; ▪ Inability to timely and successfully deploy 5G or other wireless technologies, or to realize significant incremental revenues from their deployment; ▪ Limited opportunities for strategic partnerships as potential partners are focused on telecommunications companies with greater scale and scope; ▪ Limited opportunities for bundling wireless service with other services such as home internet; ▪ Limited access to content, as well as limited ability to obtain acceptably priced content; ▪ Limited access to devices as larger competitors enter into exclusive device arrangements; ▪ Consumer expectations that UScellular provides lower-priced offerings relative to larger competitors; ▪ Limited ability to influence industry standards; ▪ Limited ability to acquire or build additional towers; ▪ Reduced ability to invest in research and development of new services and products; ▪ Lower risk tolerance when evaluating new markets; ▪ Vendors may deem UScellular non-strategic and not develop or sell services and products to UScellular, particularly where technical requirements differ from those of larger companies; ▪ Limited access to intellectual property; and ▪ Other limited opportunities such as for software development or third-party distribution.
While there is uncertainty, UScellular expects that regulatory support payments will likely decline in future periods, and there is no assurance that UScellular will qualify for future regulatory support programs.
While there is uncertainty, UScellular expects regulatory support payments to decline in future periods, and there is no assurance that UScellular will qualify for future regulatory support programs.
UScellular may or may not be able to recover some or all of those taxes from its customers and the amount of taxes may deter demand for its services or increase its cost to provide service. 20) Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on UScellular’s business, financial condition or results of operations.
UScellular may or may not be able to recover some or all those taxes from its customers and the amount of taxes may deter demand for its services or increase its cost to provide service. 22) Settlements, judgments, restraints on its current or future manner of doing business and/or costs resulting from pending and future legal and policy proceedings could have an adverse effect on UScellular’s business, financial condition or results of operations.
This could have an adverse effect on UScellular’s ability to attain and sustain long-term, profitable revenue growth and could have an adverse effect on its business, financial condition or results of operations. 12 Table of Contents 16) UScellular has significant investments in entities that it does not control.
This could have an adverse effect on UScellular’s ability to attain and sustain long-term, profitable revenue growth and could have an adverse effect on its business, financial condition or results of operations. 14 Table of Contents 19) UScellular has significant investments in entities that it does not control.
However, UScellular is unable to predict the future actions of the various legislative and regulatory bodies that govern UScellular, and such actions could have adverse effects on UScellular’s business. 13 Table of Contents 19) UScellular receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on UScellular’s business, financial condition or results of operations.
However, UScellular is unable to predict the future actions of the various legislative and regulatory bodies that govern UScellular, and such actions could have adverse effects on UScellular’s business. 21) UScellular receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on UScellular’s business, financial condition or results of operations.
Financial Risk Factors 13) Uncertainty in UScellular’s or TDS' future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in UScellular’s or TDS' performance or market conditions, changes in UScellular’s or TDS' credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to UScellular, which has required and could in the future require UScellular to reduce or delay its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, divest assets or businesses, and/or reduce or cease share repurchases.
Financial Risk Factors 16) Uncertainty in UScellular’s or TDS' future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in UScellular’s or TDS' performance or market conditions, changes in UScellular’s or TDS' credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to UScellular, which has required and could in the future require UScellular to reduce or delay its construction, development or acquisition programs, divest assets or businesses, and/or reduce or cease share repurchases.
For example, the expansion of other carriers' network coverage in UScellular's footprint and/or lower roaming rates with other carriers could continue to decrease future roaming revenues for UScellular. Similarly, UScellular's customers can access another carrier’s network automatically only if the other carrier allows UScellular's customers to roam on its network.
For example, the expansion of other carriers' network coverage in UScellular's footprint and/or lower roaming rates with other carriers has decreased and is expected to continue to decrease roaming revenues for UScellular. Similarly, UScellular's customers can access another carrier’s network automatically only if the other carrier allows UScellular's customers to roam on its network.
UScellular has smaller scale efficiencies compared to larger competitors. UScellular may be unable to compete successfully with larger companies that have substantially greater financial, technical, marketing, sales, purchasing and distribution resources or that offer more services than UScellular, which could adversely affect UScellular’s revenues and costs of doing business.
UScellular has lack of scale and structural disadvantages compared to larger competitors. UScellular may be unable to compete successfully with larger companies that have substantially greater financial, technical, marketing, sales, purchasing and distribution resources or that offer more services than UScellular, which has adversely affected and could continue to adversely affect UScellular’s revenues and costs of doing business.
There is competition in service plan pricing; handsets and other devices; promotional discounts; network quality, coverage, speed and technologies, including 5G technology; distribution; new entrants; bundled services and products, such as content; and other categories.
There is competition in service plan pricing; handsets and other devices; promotional discounts; network quality, coverage, speed and technologies, including 5G technology; distribution; new entrants; bundled services, such as home internet and wireless; and other categories.
The FCC may not be able to allocate spectrum sufficient to meet the demands of all those wishing to obtain wireless spectrum licenses for new market entry or to expand their spectrum holdings to meet the expanding demand for data services or to address other spectrum constraints.
The FCC currently does not have authority to conduct spectrum auctions. The FCC may not be able to allocate spectrum sufficient to meet the demands of all those wishing to obtain wireless spectrum licenses for new market entry or to expand their spectrum holdings to meet the expanding demand for data services or to address other spectrum constraints.
Competition in the wireless industry is intense and is expected to remain intense in the future due to multiple factors such as increasing market penetration, introduction of new products, new competitors, increasing promotional aggressiveness and changing prices.
Competition in the wireless industry is intense and is expected to increase in intensity into the foreseeable future due to multiple factors such as increasing market penetration, introduction of new products, new competitors, increasing promotional aggressiveness and changing prices.
Further, a spectrum constrained provider will generally not be able to achieve the data speeds that other competitors with more spectrum are able to provide. 8 Table of Contents UScellular may acquire access to spectrum through a number of alternatives, including acquisitions, exchanges and participation in spectrum auctions.
Further, a spectrum constrained provider will generally not be able to achieve the data speeds that other competitors with more spectrum are able to provide. UScellular may acquire access to spectrum through a number of alternatives, including acquisitions, exchanges and participation in spectrum auctions. UScellular may participate in spectrum auctions conducted by the FCC in the future.
UScellular and its competitors are actively marketing their deployment of 5G and, as a result, are raising consumer awareness of the technology.
UScellular and its competitors are actively marketing their deployment of 5G and, as a result, continue to raise consumer awareness of the technology.
The applicability of these surcharges and fees to UScellular’s services is uncertain in many cases and jurisdictions may contest whether UScellular has assessed and remitted those monies correctly. Periodically, state and federal regulators may increase or change the surcharges and fees UScellular currently pays. In some instances, UScellular passes through these charges to its customers.
The applicability of these surcharges and fees to UScellular’s services is uncertain in many cases and periodically, state and federal regulators may increase or change the surcharges and fees UScellular currently pays. In some instances, UScellular passes through these charges to its customers.
UScellular may require substantial additional capital for, among other uses, acquisitions of providers of telecommunications services or products, spectrum license or system acquisitions, capital expenditures, the repurchase of shares, or making additional investments. There can be no assurance that sufficient funds will continue to be available to UScellular or its subsidiaries on terms or at prices acceptable to UScellular.
UScellular may require substantial additional capital for, among other uses, capital expenditures, acquisitions, investments in new technologies, and the repurchase of shares. There can be no assurance that sufficient funds will continue to be available to UScellular or its subsidiaries on terms or at prices acceptable to UScellular.
This risk has increased with UScellular's recent financial and operating performance. If UScellular breaches a financial or other covenant of any of these agreements, it would result in a default under that agreement, and could involve a cross-default under other debt instruments.
If UScellular breaches a financial or other covenant of any of these agreements, it would result in a default under that agreement, and could involve a cross-default under other debt instruments.
In the interim, some state legislators and regulators are seeking to or have already enacted state net neutrality laws and regulations, and it is unclear whether more states will seek to do so now that the FCC has announced its intent to reinstate net neutrality rules.
Some state legislators and regulators are seeking to or have already enacted state net neutrality laws and regulations, and it is unclear whether more states will seek to do so.
Depending on a range of factors, these or similar proceedings could impose restraints on UScellular’s current or future manner of doing business. 21) The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on UScellular's business, financial condition or results of operations.
See Note 14 — Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information related to legal proceedings. 23) The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on UScellular's business, financial condition or results of operations.
The decision to conduct auctions, and the determination of what spectrum frequencies will be made available for auction and the determination of geographic size of wireless spectrum licenses, are made by the FCC pursuant to laws that it administers. The FCC currently does not have authority to conduct spectrum auctions.
As required by law, the FCC has conducted auctions for wireless spectrum licenses to use some parts of the radio spectrum. The decision to conduct auctions, and the determination of what spectrum frequencies will be made available for auction and the determination of geographic size of wireless spectrum licenses, are made by the FCC pursuant to laws that it administers.
This comprehensive process could result in a diversion of management's attention from UScellular's existing business; a failure to achieve financial and operating objectives; the failure to retain key personnel, customers, business partners or contracts; and volatility in UScellular's stock price. In addition, this process has already resulted in the incurrence of significant expense - this is expected to continue.
The uncertainty regarding the transactions and continued strategic alternatives review process could result in: a diversion of management's attention from UScellular's existing business; a failure to achieve financial and operating objectives; adverse effects on UScellular's financial condition or results of operations; a failure to retain key personnel, customers, business partners or contracts; and volatility in UScellular's stock price. 6 Table of Contents The strategic alternatives review process has already resulted in the incurrence of significant expense primarily related to legal and financial advisors - this is expected to continue.
On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
Costs and uncertainties related to the transactions could have adverse effects on UScellular's financial condition or results of operations. On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
Competition in the tower industry is also challenging, as UScellular competes with public and private tower companies, wireless carrier tower alliances, private equity sponsored tower companies, and owners of non-communications sites such as utility towers, rooftop structures, water towers, and other alternative structures.
Many of UScellular’s wireless and other competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than UScellular. 8 Table of Contents Competition in the tower industry is also challenging, as UScellular competes with public and private tower companies, private equity sponsored tower companies, and owners of non-communications sites such as utility towers, rooftop structures, water towers, and other alternative structures.
Although to date UScellular has not discovered a material security breach, these efforts may be insufficient to prevent a material security breach stemming from future cyber-attacks including ransomware.
Although to date UScellular has not discovered a material security breach, these efforts may be insufficient to prevent a material security breach stemming from future cyber-attacks including ransomware. Recently, companies in the telecommunications industry have been the subject of targeted cybersecurity attacks, which may increase the risk for UScellular.
In general, UScellular may not disclose the negotiation of such transactions until a definitive agreement has been reached.
UScellular may change the markets in which it operates and the services that it provides through such acquisitions, divestitures and/or exchanges. In general, UScellular may not disclose the negotiation of such transactions until a definitive agreement has been reached.
Many of these competitors are larger than UScellular, have greater financial and other resources, have more advantageous tower locations than UScellular, have greater capacity on their towers, and have more scale and coverage nationwide than UScellular – such factors could result in an inability to acquire or build additional towers, difficulty in leasing tower space, or cause lease revenue to decline in the future. 6 Table of Contents 2) Changes in roaming practices or other factors could cause UScellular's roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact UScellular's ability to service its customers in geographic areas where UScellular does not have its own network, which could have an adverse effect on UScellular's business, financial condition or results of operations.
Many of these competitors are larger than UScellular, have greater financial and other resources, have more advantageous tower locations than UScellular, have greater capacity on their towers, and have more scale and coverage nationwide than UScellular – such factors could result in an inability to acquire or build additional towers, difficulty in leasing tower space or renewing leases, or cause lease revenue to decline in the future. 6) UScellular’s lack of scale and structural disadvantages relative to larger competitors that may have greater financial and other resources than UScellular has caused and could continue to cause UScellular to be unable to compete successfully, which has adversely affected and could continue to adversely affect its business, financial condition or results of operations.
UScellular cannot provide assurance that circumstances that could have a material adverse effect on its liquidity or capital resources will not occur. TDS’ credit rating from nationally recognized credit agencies may impact UScellular’s credit rating as, given UScellular’s ownership structure, the rating agencies often consider rating actions related to TDS and UScellular in tandem.
TDS’ credit rating from nationally recognized credit agencies may impact UScellular’s credit rating as, given UScellular’s ownership structure, the rating agencies often consider rating actions related to TDS and UScellular in tandem.
Although UScellular has entered into roaming agreements with national carriers, there is no assurance that UScellular will be able to maintain these agreements and/or enter into new agreements with other carriers to provide roaming services or that it will be able to do so on reasonable or cost-effective terms.
Although UScellular has entered into roaming agreements with national carriers, there is no assurance that UScellular will be able to maintain these agreements and/or enter into new agreements with other carriers to provide roaming services or that it will be able to do so on reasonable or cost-effective terms. 9 Table of Contents Some competitors may be able to obtain lower roaming rates than UScellular is able to obtain because they have larger data usage or call volumes or may be able to reduce roaming charges by providing service principally over their own networks.
These competitive factors have resulted in losses of retail connections and UScellular anticipates that they will continue to do so. Similarly, these competitive pressures have caused the prices for services and products to decline and the costs to compete to increase and UScellular anticipates that they will continue to do so.
These competitive factors have and are expected to continue to result in losses of retail connections, may cause the prices for certain services and products to decline and the costs to compete to increase.
In particular, competition from cable wireless companies has increased in recent periods, as they have continued to expand their presence in the wireless industry and have offered more competitive pricing. Many of UScellular’s wireless competitors and other competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than UScellular.
In particular, competition from cable wireless companies has increased in recent periods and is expected to increase into the foreseeable future, as they have continued to expand their presence in the wireless industry and have offered more competitive pricing.
The reader should carefully consider the following risk factors and other information contained in, or incorporated by reference into, this Form 10-K to understand the material risks relating to UScellular’s business. Operational Risk Factors 1) Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect UScellular’s revenues or increase its costs to compete.
The reader should carefully consider the following risk factors and other information contained in, or incorporated by reference into, this Form 10-K to understand the material risks relating to UScellular’s business, financial condition or results of operations.
If UScellular is unable to obtain timely access to new content or wireless devices being developed by vendors, its business, financial condition or results of operations could be adversely affected. 5) Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on UScellular’s business, financial condition or results of operations.
If UScellular is unable to obtain timely access to new content or wireless devices being developed by vendors, its business, financial condition or results of operations could be adversely affected. 7) Changes in roaming practices or other factors could cause UScellular's roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact UScellular's ability to service its customers in geographic areas where UScellular does not have its own network, which could have an adverse effect on UScellular's business, financial condition or results of operations.
Various regulatory agencies and legislative bodies could implement different policies with respect to many federal laws and regulations, including but not limited to changes to fiscal and tax policies, trade policies, tariffs on import goods and climate change. New or amended regulatory requirements could increase UScellular’s costs and divert resources from other initiatives.
Changes in the administration of the various regulatory agencies and legislative bodies are resulting in and could continue to result in different policies with respect to many federal laws and regulations, including but not limited to changes to fiscal and tax policies, trade policies, tariffs on imported goods, climate change and workforce-related practices.
UScellular’s revolving credit agreement, term loan agreement, export credit financing agreement and receivables securitization agreement require UScellular to comply with certain affirmative and negative covenants, including certain financial covenants. Depending on the actual financial performance of UScellular, there is a risk that UScellular could fail to satisfy the required financial covenants.
Depending on the actual financial performance of UScellular, there is a risk that UScellular could fail to satisfy the required financial covenants. This risk has increased with UScellular's recent financial and operating performance.
Regulatory, Legal and Governance Risk Factors 17) TDS and UScellular have initiated a process to explore a range of strategic alternatives for UScellular and there can be no assurance that any strategic alternative will be successfully identified or completed, that any such strategic alternative will result in additional value for UScellular and its shareholders, or that the process will not have an adverse impact on UScellular's business or financial statements.
There can be no assurance that the strategic alternatives review process, which is ongoing, will result in the transactions or any strategic alternative of any kind being successfully completed or that the process or any outcomes of the process will not have an adverse impact on UScellular's business or financial statements.
Adding to this uncertainty are a series of court cases challenging the constitutionality of the universal service fund program that establishes and administers these regulatory support payments. Telecommunications providers pay a variety of surcharges and fees on their gross revenues from interstate and intrastate services, including USF fees and common carrier regulatory fees.
Adding to this uncertainty are a series of court cases challenging the constitutionality of the universal service fund program that establishes and administers these regulatory support payments. On July 24, 2024, differing from earlier decisions at the Sixth and Eleventh Circuits, the U.S.
No assurance can be given that UScellular will be successful with respect to its acquisition, divestiture or exchange strategies or initiatives. 10) A failure by UScellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations.
Operational Risk Factors 4) A delay or failure by UScellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure as well as renew wireless spectrum licenses, could adversely affect its operations.
Also, UScellular has other arrangements with third parties, including arrangements pursuant to which UScellular outsources certain support functions to third-party vendors.
Supply chain disruptions may result in limited component availability, constraints on certain devices, extended lead times, delayed construction and additional uncertainty. Also, UScellular has other arrangements with third parties, including arrangements pursuant to which UScellular outsources certain support functions to third-party vendors.
There can be no assurance that such comprehensive process will result in any strategic alternative of any kind being successfully identified or completed or that the process or any outcomes of the process will not have an adverse impact on UScellular's business or financial statements. 18) Failure by UScellular to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect UScellular’s business, financial condition or results of operations.
Regulatory, Legal and Governance Risk Factors 20) Failure by UScellular to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect UScellular’s business, financial condition or results of operations.
A substantial portion of UScellular's debt is subject to variable interest rates, which has increased interest expense in recent periods and UScellular will continue to be vulnerable to unfavorable changes in market interest rates.
A substantial portion of UScellular's debt is subject to variable interest rates, which causes UScellular to be vulnerable to unfavorable changes in market interest rates. UScellular’s revolving credit agreement, term loan agreements, export credit financing agreement and receivables securitization agreement require UScellular to comply with certain affirmative and negative covenants, including certain financial covenants.
As part of UScellular’s operating strategy, UScellular from time to time may be engaged in the acquisition, divestiture or exchange of companies, businesses, strategic properties, wireless spectrum or other assets. UScellular may change the markets in which it operates and the services that it provides through such acquisitions, divestitures and/or exchanges.
UScellular has entered into and may continue to enter into agreements to divest of companies, businesses, wireless spectrum and other assets. UScellular may also be engaged in the acquisition, divestitures or exchange of companies, businesses, strategic properties, wireless spectrum or other assets.
Transition to 5G or other new technologies involves significant time, cost and risk, and anticipated products and revenues may not be realized. Furthermore, the wireless business experiences rapid technology changes and new services and products.
Transition to 5G or other new technologies involves significant time, cost and risk, and anticipated products and revenues may not be realized. Due to its lack of scale, UScellular has higher costs per subscriber than its larger competitors and is balancing the timing of investments, such as its 5G deployment, with liquidity constraints.
Failure to ensure effective transfer of knowledge and smooth transition involving key employees could also adversely affect UScellular’s business, financial condition and results of operations. 4) UScellular’s smaller scale relative to larger competitors that may have greater financial and other resources than UScellular could cause UScellular to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations.
Failure to ensure effective transfer of knowledge and smooth transition involving key employees could also adversely affect UScellular’s business, financial condition and results of operations. 9) Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, cost increases, churn from customer switching activity and other factors, could have an adverse effect on UScellular’s business, financial condition or results of operations.
UScellular’s business plan includes significant construction activities and enhancements to its network, support and other systems and infrastructure. Additionally, the deployment of new wireless technologies, including 5G, will require substantial investments in UScellular's wireless network. As UScellular deploys, expands and enhances its network, it may need to acquire additional spectrum.
Additionally, the deployment of new wireless technologies, including the continued deployment of 5G, will require substantial investments in UScellular's wireless network.
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Some competitors may be able to obtain lower roaming rates than UScellular is able to obtain because they have larger data usage or call volumes or may be able to reduce roaming charges by providing service principally over their own networks.
Added
Announced Transactions and Strategic Alternatives Review Risk Factors 1) TDS and UScellular entered into a Securities Purchase Agreement dated as of May 24, 2024 with T-Mobile and USCC Wireless Holdings, LLC, pursuant to which, among other things, UScellular has agreed to sell its wireless operations and select spectrum assets to T-Mobile.
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UScellular may participate in spectrum auctions conducted by the FCC in the future. As required by law, the FCC has conducted auctions for wireless spectrum licenses to use some parts of the radio spectrum.
Added
In addition, UScellular, and certain subsidiaries of UScellular, entered into the Verizon Purchase Agreement on October 17, 2024, and the AT&T Purchase Agreement on November 6, 2024 to sell certain wireless spectrum licenses.
Removed
Further, UScellular's supply chain could be disrupted unexpectedly by raw material shortages, wars, natural disasters, disease or other factors. Supply chain disruptions may result in limited component availability, constraints on certain devices, extended lead times, delayed construction and additional uncertainty.
Added
There is no guarantee that the transactions contemplated by the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement will be able to be consummated or that UScellular will be able to find buyers at mutually agreeable prices for its spectrum assets not subject to the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement .

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe UScellular environment is monitored for potential security threats and security events are investigated and acted on to minimize potential risk to the environment. The full Board of Directors engages in oversight of UScellular's cybersecurity risks. The Board of Directors receives regular updates from management on technology and security updates and UScellular’s assessment of cybersecurity threats and mitigation plans.
Biggest changeThe Board of Directors receives regular updates from management on technology and security updates and UScellular’s assessment of cybersecurity threats and mitigation plans. The Senior Vice President of Information Technology provides the full Board of Directors an annual update and discussion of the cybersecurity program.
The assessment results are used to drive continuous improvement in the UScellular cybersecurity control environment, as well as to manage potential data security risks of third-party service providers. UScellular assesses the threat and vulnerability landscape using various commercial, government, vendor and publicly available information sources and tools.
The assessment results are used to drive continuous improvement in the UScellular cybersecurity control environment, as well as to manage potential data security risks of third-party service providers. UScellular identifies risks across the threat and vulnerability landscape using various commercial, government, vendor and publicly available information sources and tools.
UScellular manages these evolving risks through ongoing investments in the security program including active monitoring of the internal data environment and the environments of third-party service providers who manage sensitive data. In addition, UScellular Information Technology leaders conduct regular cyber incident simulations to ensure preparedness in the event of a cyber-attack.
The UScellular security operations program includes active monitoring of the internal data environment and regular assessment of the environments of third-party service providers who manage sensitive data. In addition, UScellular security leaders conduct regular cyber incident simulations to ensure preparedness in the event of a cyber-attack and further test potential risks.
The UScellular Audit Committee oversees the processes over internal controls and financial reporting that includes controls and procedures that are designed to ensure that significant cybersecurity incidents are communicated to both senior management and the Audit Committee. Cybersecurity is also discussed with the Technology Advisory Group of the Board of Directors as warranted, at least on an annual basis.
The UScellular Audit Committee oversees the processes over internal controls and financial reporting that includes controls and procedures that are designed to ensure that significant cybersecurity incidents are communicated to both senior management and the Audit Committee. The Audit Committee meets with the Senior Vice President of Information Technology at least two times per year.
UScellular leverages external parties to perform independent assessments and tests of security controls in the environment. UScellular’s Information Technology Security leaders are responsible for assessing and managing cybersecurity risks. Management has a depth of cybersecurity experience focused on increasing the organization's resilience to security threats and stays current on new developments through continuing education and monitoring of the cybersecurity landscape.
He has over twenty years of experience at the company, encompassing network engineering, information technology and cyber security. Management has a depth of cybersecurity experience focused on increasing the organization's resilience to security threats and stays current on new developments through continuing education and monitoring of the cybersecurity landscape.
Item 1C. Cybersecurity The UScellular information security program aligns with the National Institute of Standards and Technology (NIST) cybersecurity framework. Risk assessments are conducted periodically leveraging this standard and are integrated into the UScellular Enterprise Risk Management (ERM) program.
Item 1C. Cybersecurity The UScellular information security program is based on a defense-in-depth approach and aligns with the National Institute of Standards and Technology (NIST) cybersecurity framework. Security control and maturity assessments are conducted periodically leveraging this standard. UScellular also leverages internal and external auditors and consultants to perform independent assessments and tests of security controls.
Added
Risks related to third-party providers who have access to UScellular data and systems are identified, assessed and managed through a formal third-party risk assessment process. Third-parties who access sensitive company or customer information are contractually obligated to meet specific privacy and security requirements.
Added
Identified risks are evaluated against a risk classification framework to direct remediation, mitigation and management efforts based on severity. Cybersecurity risks are integrated into the UScellular Enterprise Risk Management (ERM) program with updates provided on a quarterly basis. The Senior Vice President of Information Technology is responsible for assessing and managing cybersecurity risks.
Added
As part of their accountability for incident response, significant incidents are communicated to an internal committee including the Chief Financial Officer and general counsel to assess their materiality and if materiality is confirmed it is reported by the defined process.
Added
To date UScellular has not identified nor become aware of any cybersecurity incidents that individually or in aggregate have materially affected or are reasonably likely to materially affect the company, including its business strategy, results of operations, or financial condition. The full Board of Directors engages in oversight of UScellular's cybersecurity risks.
Added
Cybersecurity is also discussed with the Technology Advisory Group of the Board of Directors as warranted, typically on an annual basis.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThese properties are either owned or leased by UScellular, one of its subsidiaries, or the partnership, limited liability company or corporation which holds the license issued by the FCC. As of December 31, 2023, UScellular’s gross investment in property, plant and equipment was $9,560 million.
Biggest changeThese properties are either owned or leased by UScellular, one of its subsidiaries, or the partnership, limited liability company or corporation which holds the license issued by the FCC. As of December 31, 2024, UScellular’s gross investment in property, plant and equipment was $8,387 million. Item 3.
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Legal Proceedings For more information related to legal proceedings, see Note 14 — Commitments and Contingencies in the Notes to Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 19 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere were no purchases made by or on behalf of UScellular, and any open market purchases made by any “affiliated purchaser” (as defined by the SEC) of UScellular, of UScellular Common Shares during the fourth quarter of 2023. Item 6. [Reserved] 19 Table of Contents
Biggest changeThe following table provides certain information with respect to all purchases made by or on behalf of UScellular, or any open market purchases made by any "affiliated purchaser" (as defined by the SEC) of UScellular, of UScellular Common Shares during the fourth quarter of 2024 . The purchases below were made under a Rule 10b5-1 stock repurchase plan.
Telecommunications Index. 18 Table of Contents Issuer Purchases of Equity Securities In November 2009, UScellular announced by Form 8-K that the Board of Directors of UScellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis.
Telecommunications Index. 20 Table of Contents Issuer Purchases of Equity Securities In November 2009, UScellular announced by Form 8-K that the Board of Directors of UScellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Information UScellular's Common Shares are listed on the New York Stock Exchange under the symbol "USM." As of January 31, 2024, the last trading day of the month, UScellular's Common Shares were held by 224 record owners.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Information UScellular's Common Shares are listed on the New York Stock Exchange under the symbol "USM." As of January 31, 2025, the last trading day of the month, UScellular's Common Shares were held by 212 record owners.
Stock Performance Graph The following chart provides a comparison of UScellular’s cumulative total return to shareholders during the previous five years to the returns of the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones U.S. Telecommunications Index.
UScellular cannot predict whether the outcome of the ongoing strategic alternatives review process or other factors would impact such intention. Stock Performance Graph The following chart provides a comparison of UScellular’s cumulative total return to shareholders during the previous five years to the returns of the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones U.S.
UScellular did not determine to terminate the foregoing Common Share repurchase program, as amended, or cease making further purchases thereunder, during the fourth quarter of 2023. The maximum number of shares that may yet be purchased under this program was 1,927,000 as of December 31, 2023.
UScellular did not determine to terminate the foregoing Common Share repurchase program, as amended, or cease making further purchases thereunder, during the fourth quarter of 2024.
Telecommunications Index 100 127.88 120.31 109.89 103.57 107.20 The comparison above assumes $100.00 invested at the close of trading on the last trading day of 2018, in UScellular Common Shares, S&P 500 Index and the Dow Jones U.S.
Telecommunications Index 100 94.08 85.93 80.99 83.83 108.72 The comparison above assumes $100.00 invested at the close of trading on the last trading day of 2019, in UScellular Common Shares, S&P 500 Index and the Dow Jones U.S.
Note: Cumulative total return assumes reinvestment of dividends. 2018 2019 2020 2021 2022 2023 UScellular Common Shares (NYSE: USM) $ 100 $ 69.71 $ 59.05 $ 60.65 $ 40.11 $ 79.91 S&P 500 Index 100 131.49 155.68 200.37 164.08 207.21 Dow Jones U.S.
Telecommunications Index. Note: Cumulative total return assumes reinvestment of dividends. 2019 2020 2021 2022 2023 2024 UScellular Common Shares (NYSE: USM) $ 100 $ 84.71 $ 87.00 $ 57.54 $ 114.63 $ 173.05 S&P 500 Index 100 118.40 152.39 124.79 157.59 197.02 Dow Jones U.S.
Removed
UScellular cannot predict whether the outcome of the ongoing process to explore a range of strategic alternatives that UScellular and TDS announced on August 4, 2023 or other factors would impact such intention.
Added
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2024 170,370 $ 58.63 170,370 1,282,497 November 1 - 30, 2024 137,852 $ 62.83 137,852 1,144,645 December 1 - 31, 2024 157,703 $ 62.64 157,703 986,942 Total for or as of the end of the quarter ended December 31, 2024 465,925 $ 61.23 465,925 986,942 Item 6. [Reserved] 21 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperational Risk Factors ▪ Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect UScellular’s revenues or increase its costs to compete. ▪ Changes in roaming practices or other factors could cause UScellular's roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact UScellular's ability to service its customers in geographic areas where UScellular does not have its own network, which could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ An inability to attract diverse people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ UScellular’s smaller scale relative to larger competitors that may have greater financial and other resources than UScellular could cause UScellular to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations. ▪ Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ A failure by UScellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ Advances or changes in technology could render certain technologies used by UScellular obsolete, could put UScellular at a competitive disadvantage, could reduce UScellular’s revenues or could increase its costs of doing business. ▪ Complexities associated with deploying new technologies present substantial risk and UScellular investments in unproven technologies may not produce the benefits that UScellular expects. ▪ Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular’s business could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ A failure by UScellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations. ▪ Difficulties involving third parties with which UScellular does business, including changes in UScellular's relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market UScellular’s services, could adversely affect UScellular's business, financial condition or results of operations. ▪ A failure by UScellular to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on UScellular’s business, financial condition or results of operations. 37 Index to MD&A Financial Risk Factors ▪ Uncertainty in UScellular’s or TDS' future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in UScellular’s or TDS' performance or market conditions, changes in UScellular’s or TDS' credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to UScellular, which has required and could in the future require UScellular to reduce or delay its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, divest assets or businesses, and/or reduce or cease share repurchases. ▪ UScellular has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt. ▪ UScellular’s assets and revenue are concentrated in the U.S. wireless telecommunications industry.
Biggest changeOperational Risk Factors ▪ A delay or failure by UScellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure as well as renew wireless spectrum licenses, could adversely affect its operations. ▪ Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect UScellular’s revenues or increase its costs to compete. ▪ UScellular’s lack of scale and structural disadvantages relative to larger competitors that may have greater financial and other resources than UScellular has caused and could continue to cause UScellular to be unable to compete successfully, which has adversely affected and could continue to adversely affect its business, financial condition or results of operations. ▪ Changes in roaming practices or other factors could cause UScellular's roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact UScellular's ability to service its customers in geographic areas where UScellular does not have its own network, which could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, cost increases, churn from customer switching activity and other factors, could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ A failure by UScellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on UScellular’s business, financial condition or results of operations. 46 Index to MD&A ▪ Advances or changes in technology could render certain technologies used by UScellular obsolete, could put UScellular at a competitive disadvantage, could reduce UScellular’s revenues or could increase its costs of doing business. ▪ Complexities associated with deploying new technologies present substantial risk and UScellular investments in unproven technologies may not produce the benefits that UScellular expects. ▪ Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular’s business could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ Difficulties involving third parties with which UScellular does business, including changes in UScellular's relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market UScellular’s services, could adversely affect UScellular's business, financial condition or results of operations. ▪ A failure by UScellular to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on UScellular’s business, financial condition or results of operations.
This includes providing exceptional wireless communication services which enhance consumers’ lives, increase the competitiveness of local businesses, and improve the efficiency of government operations in the markets UScellular serves. UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a local community focus.
This includes providing wireless communication services which enhance consumers’ lives, increase the competitiveness of local businesses, and improve the efficiency of government operations in the markets UScellular serves. UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a local community focus.
UScellular makes substantial investments to acquire wireless spectrum licenses and properties and to construct and upgrade wireless telecommunications networks and facilities with a goal of creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to UScellular’s networks.
UScellular makes substantial investments to acquire wireless spectrum licenses and to construct and upgrade wireless telecommunications networks and facilities with a goal of creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to UScellular’s networks.
Strategic efforts include: ▪ UScellular offers economical and competitively priced service plans and devices to its customers and is focused on increasing revenues from sales of related products such as device protection plans and from new services such as fixed wireless home internet.
Strategic efforts include: ▪ UScellular offers economical and competitively priced wireless service plans and devices to its customers and is focused on increasing revenues from sales of related products such as device protection plans and from services such as fixed wireless home internet.
EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under GAAP and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity.
EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under GAAP and should not be considered as alternatives to Net income (loss) or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity.
Cost of equipment sold Cost of equipment sold decreased in 2023, due primarily to a decline in smartphone upgrades and gross additions, partially offset by a higher average cost per unit sold. 27 Index to MD&A Selling, general and administrative expenses Selling, general and administrative expenses decreased in 2023, due primarily to decreases in bad debts expense, commissions, facilities and employee-related expenses, partially offset by an increase in advertising expenses as well as $8 million of expenses related to the strategic alternatives review.
Cost of equipment sold Cost of equipment sold decreased in 2023, due primarily to a decline in smartphone upgrades and gross additions, partially offset by a higher average cost per unit sold. 34 Index to MD&A Selling, general and administrative expenses Selling, general and administrative expenses decreased in 2023, due primarily to decreases in bad debts expense, commissions, facilities and employee-related expenses, partially offset by an increase in advertising expenses as well as $8 million of expenses related to the strategic alternatives review.
These were partially offset by $250 million of repayments on the receivables securitization agreement, a $75 million repayment on the revolving credit agreement, a $50 million repayment on the EIP receivables repurchase agreement, the repurchase of $43 million of Common Shares and cash paid for software license agreements of $22 million. 33 Index to MD&A Consolidated Balance Sheet Analysis The following discussion addresses certain captions in the consolidated balance sheet and changes therein.
These were partially offset by $250 million of repayments on the receivables securitization agreement, a $75 million repayment on the revolving credit agreement, a $50 million repayment on the EIP receivables repurchase agreement, the repurchase of $43 million of Common Shares and cash paid for software license agreements of $22 million. 42 Index to MD&A Consolidated Balance Sheet Analysis The following discussion addresses certain captions in the consolidated balance sheet and changes therein.
UScellular’s investment in the Los Angeles SMSA Limited Partnership (LA Partnership) contributed pre-tax income of $65 million for both 2023 and 2022. See Note 8 — Investments in Unconsolidated Entities in the Notes to Consolid ated Financial Statements for additional information. Interest expense Interest expense increased in 2023 due primarily to interest rate increases on variable rate debt.
UScellular’s investment in the Los Angeles SMSA Limited Partnership (LA Partnership) contributed pre-tax income of $65 million for both 2023 and 2022. See Note 9 — Investments in Unconsolidated Entities in the Notes to Consolid ated Financial Statements for additional information. Interest expense Interest expense increased in 2023 due primarily to interest rate increases on variable rate debt.
Fluctuations in market interest rates can lead to volatility in the fair value of fixed-rate notes and interest expense on variable-rate debt. The following table presents the scheduled principal payments on long-term debt, lease obligations and the related weighted average interest rates by maturity dates at December 31, 2023: Principal Payments Due by Period Long-Term Debt Obligations 1 Weighted-Avg.
Fluctuations in market interest rates can lead to volatility in the fair value of fixed-rate notes and interest expense on variable-rate debt. The following table presents the scheduled principal payments on long-term debt, lease obligations and the related weighted average interest rates by maturity dates at December 31, 2024: Principal Payments Due by Period Long-Term Debt Obligations 1 Weighted-Avg.
Export Credit Financing Agreement UScellular has a $150 million term loan credit facility with Export Development Canada to finance (or refinance) imported equipment, including equipment purchased prior to entering the term loan facility agreement. The maturity date for the agreement is January 2027. As of December 31, 2023, UScellular has borrowed the full amount available under the agreement.
Export Credit Financing Agreement UScellular has a $150 million term loan credit facility with Export Development Canada to finance (or refinance) imported equipment, including equipment purchased prior to entering the term loan facility agreement. The maturity date for the agreement is January 2027. As of December 31, 2024, UScellular has borrowed the full amount available under the agreement.
UScellular believes that it was in compliance as of December 31, 2023, with all covenants and other requirements set forth in the UScellular long-term debt indentures. UScellular has not failed to make nor does it expect to fail to make any scheduled payment of principal or interest under such indentures.
UScellular believes that it was in compliance as of December 31, 2024, with all covenants and other requirements set forth in the UScellular long-term debt indentures. UScellular has not failed to make nor does it expect to fail to make any scheduled payment of principal or interest under such indentures.
See Note 3 — Fair Value Measurements in the Notes to Consolidated Financial Statements for additional information. 39 Index to MD&A Supplemental Information Relating to Non-GAAP Financial Measures UScellular sometimes uses information derived from consolidated financial information but not presented in its financial statements prepared in accordance with GAAP to evaluate the performance of its business.
See Note 3 — Fair Value Measurements in the Notes to Consolidated Financial Statements for additional information. 49 Index to MD&A Supplemental Information Relating to Non-GAAP Financial Measures UScellular sometimes uses information derived from consolidated financial information but not presented in its financial statements prepared in accordance with GAAP to evaluate the performance of its business.
UScellular is also required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. UScellular believes that it was in compliance as of December 31, 2023 with all such financial covenants.
UScellular is also required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. UScellular believes that it was in compliance as of December 31, 2024 with all such financial covenants.
Capital Requirements The discussion below is intended to highlight some of the significant cash outlays expected during 2024 and beyond and to highlight the spending incurred in current and prior years for these items. This discussion does not include cash required to fund normal operations, and is not a comprehensive list of capital requirements.
Capital Requirements The discussion below is intended to highlight some of the significant cash outlays expected during 2025 and beyond and to highlight the spending incurred in current and prior years for these items. This discussion does not include cash required to fund normal operations, and is not a comprehensive list of capital requirements.
Management believes the application of the following critical accounting policies and the estimates required by such application reflect its most significant judgments and estimates used in the preparation of UScellular’s consolidated financial statements. Wireless Spectrum Licenses Wireless spectrum licenses represent a significant component of UScellular’s consolidated assets.
Management believes the application of the following critical accounting policies and the estimates required by such application reflect its most significant judgments and estimates used in the preparation of UScellular’s consolidated financial statements. Wireless Spectrum License Impairment Wireless spectrum licenses represent a significant component of UScellular’s consolidated assets.
Amounts under the revolving credit agreement may be borrowed, repaid and reborrowed from time to time until maturity in July 2026. As of December 31, 2023, there were no outstanding borrowings under the revolving credit agreement, and UScellular’s unused borrowing capacity was $300 million. Term Loan Agreements UScellular has term loan agreements with maximum borrowing capacities of $800 million.
Amounts under the revolving credit agreement may be borrowed, repaid and reborrowed from time to time until maturity in July 2026. As of December 31, 2024, there were no outstanding borrowings under the revolving credit agreement, and UScellular’s unused borrowing capacity was $300 million. Term Loan Agreements UScellular has unsecured term loan agreements with maximum borrowing capacities of $800 million.
Significant cash requirements that are not routine or in the normal course of business could arise from time to time. 31 Index to MD&A Capital Expenditures UScellular makes substantial investments to acquire, construct and upgrade wireless telecommunications networks and facilities to remain competitive and as a basis for creating long-term value for shareholders.
Significant cash requirements that are not routine or in the normal course of business could arise from time to time. Capital Expenditures UScellular makes substantial investments to acquire, construct and upgrade wireless telecommunications networks and facilities to remain competitive and as a basis for creating long-term value for shareholders.
See the disclosure under the heading Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement elsewhere in this report for additional information. The accounting policies of UScellular conform to accounting principles generally accepted in the United States of America (GAAP). However, UScellular uses certain “non-GAAP financial measures” in the MD&A.
See the disclosure under the heading Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement elsewhere in this report for additional information. The accounting policies of UScellular conform to accounting principles generally accepted in the United States of America (GAAP). However, UScellular uses certain “non-GAAP financial measures” in the MD&A and the business segment information.
Postpaid ARPA was relatively flat in 2023 due to the impacts to Postpaid ARPU, offset by a decrease in the number of connections per account. 25 Index to MD&A Financial Overview The following discussion and analysis compares financial results for the year ended December 31, 2023, to the year ended December 31, 2022.
Postpaid ARPA was relatively flat in 2023 due to the impacts to Postpaid ARPU, offset by a decrease in the number of connections per account. 31 Index to MD&A Financial Overview — Wireless The following discussion and analysis compares financial results for the year ended December 31, 2024, to the year ended December 31, 2023 and the year ended December 31, 2023, to the year ended December 31, 2022.
The amounts of income tax assets and liabilities, the related income tax provision and the amount of unrecognized tax benefits are critical accounting estimates because such amounts are significant to UScellular’s financial condition and results of operations. The preparation of the consolidated financial statements requires UScellular to calculate a provision for income taxes.
The amounts of income tax assets and liabilities, the related income tax provision and the amount of unrecognized tax benefits are critical accounting estimates because such amounts are significant to UScellular’s financial condition and results of operations. 44 Index to MD&A The preparation of the consolidated financial statements requires UScellular to calculate a provision for income taxes.
UScellular’s significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies, Note 2 — Revenue Recognition and Note 10 — Leases in the Notes to Consolidated Financial Statements.
UScellular’s significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies, Note 2 — Revenue Recognition and Note 11 — Leases in the Notes to Consolidated Financial Statements.
Quantitative and Qualitative Disclosures About Market Risk See section entitled “Market Risk” in Item 7 of this Form 10-K. 42 Table of Contents
Quantitative and Qualitative Disclosures About Market Risk See section entitled “Market Risk” in Item 7 of this Form 10-K. 52 Table of Contents
Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, timing and other factors. The following discussion summarizes UScellular’s cash flow activities in 2023 and 2022. 2023 Commentary UScellular’s Cash, cash equivalents and restricted cash decreased $129 million.
Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, timing and other factors. The following discussion summarizes UScellular’s cash flow activities in 2024, 2023 and 2022. 2024 Commentary UScellular’s Cash, cash equivalents and restricted cash decreased $20 million.
Specifically, UScellular has referred to the following measures in this Form 10-K Report: ▪ EBITDA ▪ Adjusted EBITDA ▪ Adjusted OIBDA ▪ Free cash flow Following are explanations of each of these measures: EBITDA, Adjusted EBITDA and Adjusted OIBDA EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as Net income adjusted for the items set forth in the reconciliation below.
Specifically, UScellular has referred to the following measures in this Form 10-K Report: ▪ EBITDA ▪ Adjusted EBITDA ▪ Adjusted OIBDA ▪ Free cash flow ▪ Licenses impairment, net of tax Following are explanations of each of these measures: EBITDA, Adjusted EBITDA and Adjusted OIBDA EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as Net income (loss) adjusted for the items set forth in the reconciliation below.
This adjustment was not material to any of the periods impacted. 2 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure. 3 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures. 26 Index to MD&A Operating Revenues (Dollars in millions) Service revenues consist of: ▪ Retail Service – Postpaid and prepaid charges for voice, data and value-added services and cost recovery surcharges ▪ Inbound Roaming – Consideration from other wireless carriers whose customers use UScellular’s wireless systems when roaming ▪ Other Service – Amounts received from the Federal USF, third-party tower rental revenues, miscellaneous other service revenues and Internet of Things (IoT) Equipment revenues consist of: ▪ Sales of wireless devices and related accessories to new and existing customers, agents, and third-party distributors Key components of changes in the statement of operations line items were as follows: Total operating revenues Retail service revenues decreased in 2023 primarily as a result of a decrease in average postpaid and prepaid connections, partially offset by an increase in Postpaid ARPU as previously discussed in the Operational Overview section.
This adjustment was not material to any of the periods impacted. 2 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure. 3 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures. 32 Index to MD&A Operating Revenues (Dollars in millions) Service revenues consist of: ▪ Retail Service – Postpaid and prepaid charges for voice, data and value-added services and cost recovery surcharges ▪ Other Service – Amounts received from the Federal USF, inbound roaming, miscellaneous other service revenues and Internet of Things (IoT) Equipment revenues consist of: ▪ Sales of wireless devices and related accessories to new and existing customers, agents, and third-party distributors 33 Index to MD&A Key components of changes in the statement of operations line items were as follows: 2024-2023 Commentary Total operating revenues Retail service revenues decreased in 2024 primarily as a result of a decrease in average postpaid and prepaid connections, partially offset by an increase in Postpaid ARPU as previously discussed in the Operational Overview section.
See Note 12 — Debt in the Notes to Consolidated Financial Statements for additional information. 2 Represents the weighted average stated interest rates at December 31, 2023, for debt maturing in the respective periods.
See Note 13 — Debt in the Notes to Consolidated Financial Statements for additional information. 2 Represents the weighted average stated interest rates at December 31, 2024, for debt maturing in the respective periods.
The repurchase agreement expired in January 2024. Debt Covenants The revolving credit agreement, term loan agreements, export credit financing agreement and receivables securitization agreement require UScellular to comply with certain affirmative and negative covenants, which include certain financial covenants that may restrict the borrowing capacity available.
Debt Covenants The revolving credit agreement, term loan agreements, export credit financing agreement and receivables securitization agreement require UScellular to comply with certain affirmative and negative covenants, which include certain financial covenants that may restrict the borrowing capacity available.
In March 2023, the agreements were amended to require UScellular to maintain the Consolidated Leverage Ratio as of the end of any fiscal quarter at a level not to exceed the following: 4.25 to 1.00 from January 1, 2023 through March 31, 2024; 4.00 to 1.00 from April 1, 2024 through March 31, 2025; 3.75 to 1.00 from April 1, 2025 and thereafter.
UScellular is required to maintain the Consolidated Leverage Ratio as of the end of any fiscal quarter at a level not to exceed the following: 4.25 to 1.00 from January 1, 2023 to March 31, 2024; 4.00 to 1.00 from April 1, 2024 through March 31, 2025; 3.75 to 1.00 from April 1, 2025 and thereafter.
In addition, UScellular is focused on increasing tower rent revenues and expanding its solutions available to business and government customers. ▪ UScellular continues to enhance its network capabilities, including by deploying 5G technology. 5G technology helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency.
In addition, UScellular is focused on expanding its solutions available to business and government customers. ▪ UScellular continues to enhance its network capabilities, including by deploying 5G technology to help address customers’ growing demand for data services and create opportunities for new services requiring high speed and reliability as well as low latency.
Revenues from certain of these investments are long-term and in some cases are uncertain. To meet its cash-flow needs, UScellular may need to delay or reduce certain investments or sell assets. Refer to Liquidity and Capital Resources within this MD&A for additional information.
Revenues from certain of these investments are long-term and in some cases are uncertain. To meet its cash-flow needs, UScellular may need to delay or reduce certain investments or sell assets. Refer to Liquidity and Capital Resources within this MD&A and Note 7 — Divestitures in the Notes to Consolidated Financial Statements for additional information.
Fair Value of Long-Term Debt At December 31, 2023 and 2022, the estimated fair value of long-term debt obligations, excluding lease obligations, the current portion of such long-term debt and debt financing costs, was $2,611 million and $2,502 million, respectively, and the book value was $3,099 million and $3,244 million, respectively.
Fair Value of Long-Term Debt At December 31, 2024 and 2023, the estimated fair value of long-term debt obligations, excluding lease obligations, the current portion of such long-term debt and debt financing costs, was $2,785 million and $2,611 million, respectively, and the book value was $2,890 million and $3,099 million, respectively.
UScellular may require substantial additional funding for, among other uses, capital expenditures, acquisitions of providers of wireless telecommunications services, wireless spectrum license acquisitions, agreements to purchase goods or services, leases, repurchases of shares, or making additional investments.
UScellular may require substantial additional funding for, among other uses, capital expenditures, agreements to purchase goods or services, leases, repurchases of shares, or making additional investments.
Capital expenditures (i.e., additions to property, plant and equipment and system development expenditures; excludes wireless spectrum license additions), which include the effects of accruals and capitalized interest, in 2023 and 2022, were as follows: Capital Expenditures (Dollars in millions) In 2023, UScellular's capital expenditures were used for the following purposes: ▪ Enhance and maintain UScellular's network capacity and coverage, including continued deployment of 5G with a focus on mid-band spectrum to provide additional speed and capacity to accommodate increased data usage by current customers; and ▪ Invest in information technology to support existing and new services and products.
Capital expenditures (i.e., additions to property, plant and equipment and system development expenditures; excludes wireless spectrum license additions), which include the effects of accruals and capitalized interest, in 2024, 2023 and 2022 were as follows: Capital Expenditures (Dollars in millions) In 2024, UScellular's capital expenditures were used for the following purposes: ▪ Continue to deploy 5G using mid-band spectrum to provide additional speed and capacity to accommodate increased data usage by current customers; and ▪ Invest in information technology to support existing and new services and products.
On August 7, 2020, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.7-3.98 GHz bands (Auction 107). On February 24, 2021, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 254 wireless spectrum licenses for $1,283 million.
Spectrum Auctions On February 24, 2021, the FCC announced by way of Public Notice that UScellular was the provisional winning bidder of 254 wireless spectrum licenses in the 3.7-3.98 GHz bands for $1,283 million in Auction 107.
OPERATIONS ▪ Serves customers with 4.6 million retail connections including 4.1 million postpaid and 0.5 million prepaid connections ▪ Operates in 21 states ▪ Employs approximately 4,300 associates ▪ Owns 4,373 towers ▪ Operates 7,000 cell sites in service 22 Index to MD&A UScellular Mission and Strategy UScellular’s mission is to connect its customers to what matters most to them.
OPERATIONS ▪ Serves customers with 4.4 million retail connections including 4.0 million postpaid and 0.4 million prepaid connections ▪ Operates in 21 states ▪ Employs approximately 4,100 associates ▪ Owns 4,409 towers ▪ Operates 7,010 cell sites in service 24 Index to MD&A UScellular Mission and Strategy UScellular’s mission is to connect its customers to what matters most to them.
Receivables Securitization Agreement UScellular, through its subsidiaries, has a receivables securitization agreement that permits securitized borrowings using its equipment installment plan receivables. In September 2023, UScellular amended the agreement to extend the maturity date to September 2025. Amounts under the agreement may be borrowed, repaid and reborrowed from time to time until maturity.
Receivables Securitization Agreement UScellular, through its subsidiaries, has a receivables securitization agreement that permits securitized borrowings using its equipment installment plan receivables. Amounts under the agreement may be borrowed, repaid and reborrowed from time to time until September 2025. Unless the agreement is amended to extend the maturity date, repayments based on receivable collections commence in October 2025.
Equipment sales revenues decreased in 2023, due primarily to a decline in smartphone upgrades and gross additions, partially offset by a higher average price of new smartphone sales. Wireless service providers have been aggressive promotionally and on price to attract and retain customers. This includes both traditional carriers and cable companies operating as mobile virtual network operators (MVNOs).
Equipment sales revenues decreased in 2024, due primarily to a decline in smartphone devices sold due to lower upgrades and gross additions, partially offset by a higher average price of new smartphone sales. Wireless service providers have been aggressive promotionally and on price to attract and retain customers. This includes both traditional carriers and cable wireless companies.
The tax benefits recognized in the financial statements from such a position are measured based on management’s judgment as to the possible outcome that has a greater than 50% cumulative likelihood of being realized upon ultimate resolution.
The tax benefits recognized in the financial statements from such a position are measured based on management’s judgment as to the possible outcome that has a greater than 50% cumulative likelihood of being realized upon ultimate resolution. See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information.
Variable Interest Entities UScellular consolidates certain “variable interest entities” as defined under GAAP. See Note 14 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information related to these variable interest entities. UScellular may elect to make additional capital contributions and/or advances to these variable interest entities in future periods to fund their operations.
See Note 15 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information related to these variable interest entities. UScellular may elect to make additional capital contributions and/or advances to these variable interest entities in future periods to fund their operations.
Free cash flow is a non-GAAP financial measure which UScellular believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements. 2023 2022 (Dollars in millions) Cash flows from operating activities (GAAP) $ 866 $ 832 Cash paid for additions to property, plant and equipment (608) (602) Cash paid for software license agreements (66) (22) Free cash flow (Non-GAAP) $ 192 $ 208 41 Table of Contents Item 7A.
Free cash flow is a non-GAAP financial measure which UScellular believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements. 2024 2023 2022 (Dollars in millions) Cash flows from operating activities (GAAP) $ 883 $ 866 $ 832 Cash paid for additions to property, plant and equipment (537) (608) (602) Cash paid for software license agreements (66) (66) (22) Free cash flow (Non-GAAP) $ 280 $ 192 $ 208 Licenses impairment, net of tax The following non-GAAP financial measure isolates the total effects on net income of the Loss on impairment of licenses, including tax impacts.
At this time, UScellular cannot predict the ultimate outcome of such process or estimate the potential impact of such process on the financial statements. 23 Index to MD&A Terms Used by UScellular The following is a list of definitions of certain industry terms that are used throughout this document: ▪ 4G LTE – fourth generation Long-Term Evolution, which is a wireless technology that enables more network capacity for more data per user as well as faster access to data compared to third generation (3G) technology. ▪ 5G – fifth generation wireless technology that helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. ▪ Account – represents an individual or business financially responsible for one or multiple associated connections.
Refer to Supplemental Information to Non-GAAP Financial Measures within this MD&A for a reconciliation of the wireless spectrum license impairment, net of tax. 26 Index to MD&A Terms Used by UScellular The following is a list of definitions of certain industry terms that are used throughout this document: ▪ 4G LTE – fourth generation Long-Term Evolution, which is a wireless technology that enables more network capacity for more data per user as well as faster access to data compared to third generation (3G) technology. ▪ 5G – fifth generation wireless technology that helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. ▪ Account – represents an individual or business financially responsible for one or multiple associated connections.
Executive Overview 21 Terms used by UScellular 24 Operational Overview 25 Financial Overview 26 Liquidity and Capital Resources 29 Consolidated Cash Flow Analysis 33 Consolidated Balance Sheet Analysis 34 Application of Critical Accounting Policies and Estimates 35 Regulatory Matters 36 Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement 37 Market Risk 39 Supplemental Information Relating to Non-GAAP Financial Measures 40 20 Index to MD&A United States Cellular Corporation Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Overview The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial statements and notes of United States Cellular Corporation (UScellular) for the year ended December 31, 2023, and with the description of UScellular’s business included herein.
Executive Overview 23 Terms used by UScellular 27 Financial Overview – UScellular 28 Wireless Operations 30 Towers Operations 36 Liquidity and Capital Resources 38 Consolidated Cash Flow Analysis 42 Consolidated Balance Sheet Analysis 43 Application of Critical Accounting Policies and Estimates 44 Regulatory Matters 45 Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement 46 Market Risk 49 Supplemental Information Relating to Non-GAAP Financial Measures 50 22 Index to MD&A United States Cellular Corporation Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Overview The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial statements and notes of United States Cellular Corporation (UScellular) for the year ended December 31, 2024, and with the description of UScellular’s business included herein.
The wireless spectrum licenses from Auction 108 were granted by the FCC on December 1, 2022. 36 Index to MD&A Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.
UScellular received full access to the spectrum in the third quarter of 2023. 45 Index to MD&A Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.
The maturity dates for the term loan agreements range from July 2026 to July 2031. As of December 31, 2023, UScellular has borrowed the full amount available under the agreements and the outstanding borrowings were $783 million.
The maturity dates for the agreements range from July 2026 to July 2031. During 2024, UScellular repaid $40 million, in addition to required quarterly installments, under its term loan agreement due July 2026. As of December 31, 2024, UScellular has borrowed the full amount available under the agreements and the outstanding borrowings were $723 million.
Other Obligations UScellular will require capital for future spending on existing contractual obligations, including long-term debt obligations; lease commitments; commitments for device purchases, network facilities and transport services; agreements for software licensing; long-term marketing programs; commitments for wireless spectrum licenses acquired through FCC auctions; and other agreements to purchase goods or services.
Other Obligations UScellular will require capital for future spending on existing contractual obligations, including long-term debt obligations; lease commitments; commitments for device purchases, network facilities and transport services; agreements for software licensing; long-term marketing programs; and other agreements to purchase goods or services. Variable Interest Entities UScellular consolidates certain “variable interest entities” as defined under GAAP.
Therefore, there is no assurance that UScellular will make any share repurchases in the future. For additional information related to the current repurchase authorization, see Note 16 — Common Shareholders’ Equity in the Notes to Consolidated Financial Statements. 32 Index to MD&A Consolidated Cash Flow Analysis UScellular operates a capital‑intensive business.
For additional information related to the current repurchase authorization, see Note 17 — Common Shareholders’ Equity in the Notes to Consolidated Financial Statements. 41 Index to MD&A Consolidated Cash Flow Analysis UScellular operates a capital‑intensive business.
UScellular will continue to monitor the rapidly changing business and market conditions and is taking and intends to take appropriate actions, as necessary, to meet its liquidity needs. Cash and Cash Equivalents Cash and cash equivalents include cash and money market investments. The primary objective of UScellular's Cash and cash equivalents investment activities is to preserve principal.
UScellular will continue to monitor the rapidly changing business and market conditions and is taking and intends to take appropriate actions, as necessary, to meet its liquidity needs.
In addition to Cash and cash equivalents, UScellular had available undrawn borrowing capacity (taking into account debt covenant restrictions) from the following debt facilities at December 31, 2023. See the Financing section below for further details.
Refer to the Consolidated Cash Flow Analysis for additional information related to changes in Cash and cash equivalents. In addition to Cash and cash equivalents, UScellular had available undrawn borrowing capacity from the following debt facilities at December 31, 2024. See the Financing section below for further details.
Credit Ratings In certain circumstances, UScellular’s interest cost on its various agreements may be subject to increase if its current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised.
See Note 13 — Debt in the Notes to Consolidated Financial Statements for additional information related to the financing agreements. 39 Index to MD&A Credit Ratings In certain circumstances, UScellular’s interest cost on its various agreements may be subject to increase if its current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised.
Regulatory, Legal and Governance Risk Factors ▪ TDS and UScellular have initiated a process to explore a range of strategic alternatives for UScellular and there can be no assurance that any strategic alternative will be successfully identified or completed, that any such strategic alternative will result in additional value for UScellular and its shareholders, or that the process will not have an adverse impact on UScellular's business or financial statements. ▪ Failure by UScellular to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect UScellular’s business, financial condition or results of operations. ▪ UScellular receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent UScellular from using necessary technology to provide products or services or subject UScellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ There are potential conflicts of interests between TDS and UScellular. ▪ Certain matters, such as control by TDS and provisions in the UScellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of UScellular or have other consequences.
Regulatory, Legal and Governance Risk Factors ▪ Failure by UScellular to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect UScellular’s business, financial condition or results of operations. ▪ UScellular receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ Settlements, judgments, restraints on its current or future manner of doing business and/or costs resulting from pending and future legal and policy proceedings could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent UScellular from using necessary technology to provide products or services or subject UScellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ There are potential conflicts of interests between TDS and UScellular. ▪ Certain matters, such as control by TDS and provisions in the UScellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of UScellular or have other consequences. 47 Index to MD&A General Risk Factors ▪ UScellular has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on UScellular's business, financial condition or results of operations. ▪ Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede UScellular’s access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on UScellular’s business, financial condition or results of operations. ▪ The impact of public health emergencies on UScellular's business is uncertain, but depending on duration and severity could have a material adverse effect on UScellular's business, financial condition or results of operations. 48 Index to MD&A Market Risk Long-Term Debt As of December 31, 2024, approximately 70% of UScellular's long-term debt was in fixed-rate senior notes and approximately 30% in variable-rate debt.
The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income and Operating income. 40 Index to MD&A 2023 2022 (Dollars in millions) Net income (GAAP) $ 58 $ 35 Add back: Income tax expense 53 37 Interest expense 196 163 Depreciation, amortization and accretion 656 700 EBITDA (Non-GAAP) 963 935 Add back or deduct: Expenses related to strategic alternatives review 8 — Loss on impairment of licenses — 3 (Gain) loss on asset disposals, net 17 19 (Gain) loss on sale of business and other exit costs, net — (1) (Gain) loss on license sales and exchanges, net (2) — Adjusted EBITDA (Non-GAAP) 986 956 Deduct: Equity in earnings of unconsolidated entities 158 158 Interest and dividend income 10 8 Adjusted OIBDA (Non-GAAP) 818 790 Deduct: Depreciation, amortization and accretion 656 700 Expenses related to strategic alternatives review 8 — Loss on impairment of licenses — 3 (Gain) loss on asset disposals, net 17 19 (Gain) loss on sale of business and other exit costs, net — (1) (Gain) loss on license sales and exchanges, net (2) — Operating income (GAAP) $ 139 $ 69 Free Cash Flow The following table presents Free cash flow, which is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and Cash paid for software license agreements.
Income and expense items below Operating income (loss) are not provided at the individual segment level for Wireless and Towers; therefore, the reconciliations begin with EBITDA and the most directly comparable GAAP measure is Operating income (loss) rather than Net income (loss) at the segment level. 50 Index to MD&A UScellular 2024 2023 2022 (Dollars in millions) Net income (loss) (GAAP) $ (32) $ 58 $ 35 Add back: Income tax expense 10 53 37 Interest expense 183 196 163 Depreciation, amortization and accretion 665 656 700 EBITDA (Non-GAAP) 826 963 935 Add back or deduct: Expenses related to strategic alternatives review 35 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 18 17 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Adjusted EBITDA (Non-GAAP) 1,018 986 956 Deduct: Equity in earnings of unconsolidated entities 161 158 158 Interest and dividend income 12 10 8 Adjusted OIBDA (Non-GAAP) 845 818 790 Deduct: Depreciation, amortization and accretion 665 656 700 Expenses related to strategic alternatives review 35 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 18 17 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Operating income (loss) (GAAP) $ (12) $ 139 $ 69 UScellular Wireless 2024 2023 2022 (Dollars in millions) EBITDA (Non-GAAP) $ 530 $ 672 $ 656 Add back or deduct: Expenses related to strategic alternatives review 33 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 17 19 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) 719 697 677 Deduct: Depreciation, amortization and accretion 620 610 655 Expenses related to strategic alternatives review 33 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 17 19 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Operating income (loss) (GAAP) $ (90) $ 62 $ 1 51 Index to MD&A UScellular Towers 2024 2023 2022 (Dollars in millions) EBITDA (Non-GAAP) $ 123 $ 123 $ 113 Add back or deduct: Expenses related to strategic alternatives review 2 — — (Gain) loss on asset disposals 1 (2) — Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) 126 121 113 Deduct: Depreciation, amortization and accretion 45 46 45 Expenses related to strategic alternatives review 2 — — (Gain) loss on asset disposals, net 1 (2) — Operating income (GAAP) $ 78 $ 77 $ 68 Free Cash Flow The following table presents Free cash flow, which is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and Cash paid for software license agreements.
A discussion of the reasons UScellular determines these metrics to be useful and reconciliations of these measures to their most directly comparable measures determined in accordance with GAAP are included in the disclosure under the heading Supplemental Information Relating to Non-GAAP Financial Measures within the MD&A of this report. The following MD&A omits discussion of 2022 compared to 2021.
A discussion of the reasons UScellular determines these metrics to be useful and reconciliations of these measures to their most directly comparable measures determined in accordance with GAAP are included in the disclosure under the heading Supplemental Information Relating to Non-GAAP Financial Measures within the MD&A of this report. 23 Index to MD&A General UScellular provides wireless service throughout its footprint, and leases tower space to third-party carriers on UScellular-owned towers.
Interest Rates on Long-Term Debt Obligations 2 (Dollars in millions) 2024 $ 20 7.1 % 2025 20 7.1 % 2026 268 7.0 % 2027 158 7.0 % 2028 286 7.5 % Thereafter 2,228 6.2 % Total $ 2,980 6.4 % 1 The total long-term debt obligation differs from Long-term debt in the Consolidated Balance Sheet due to unamortized debt issuance costs on all non-revolving debt instruments, unamortized discounts related to the 6.7% Senior Notes, and outstanding borrowings under the receivables securitization agreement, which principal repayments are not scheduled but are instead based on actual receivable collections.
Interest Rates on Long-Term Debt Obligations 2 (Dollars in millions) 2025 $ 22 6.1 % 2026 228 6.0 % 2027 158 6.0 % 2028 286 6.5 % 2029 5 6.9 % Thereafter 2,224 6.1 % Total $ 2,923 6.1 % 1 The total long-term debt obligation differs from Long-term debt in the Consolidated Balance Sheet due to unamortized debt issuance costs on all non-revolving debt instruments, and unamortized discounts related to the 6.7% Senior Notes.
UScellular intends to finance its capital expenditures for 2024 using primarily Cash flows from operating activities, existing cash balances and, as required, additional debt financing from its existing agreements and/or other forms of available financing.
UScellular intends to finance its capital expenditures for 2025 using primarily Cash flows from operating activities, existing cash balances and, as required, additional debt financing from its existing agreements and/or other forms of available financing. 40 Index to MD&A Divestitures See Note 7 — Divestitures in the Notes to Consolidated Financial Statements for additional information related to divestitures.
Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Refer to Market Risk — Long-Term Debt for additional information regarding required principal payments and the weighted average interest rates related to UScellular’s Long-term debt.
The amounts involved may be material. Refer to Market Risk — Long-Term Debt for additional information regarding required principal payments and the weighted average interest rates related to UScellular’s Long-term debt.
In recent years, rapid changes in technology and new opportunities (such as 5G and VoLTE technology) have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades of UScellular’s networks to remain competitive; this is expected to continue in 2024 and future years with the continued deployment of 5G technology.
In recent years, changes in technology have required substantial investments in UScellular's network to remain competitive; this is expected to continue in 2025 and future years with the continued deployment of 5G technology.
Year Ended December 31, 2023 2022 2023 vs. 2022 (Dollars in millions) Retail service 1 $ 2,742 $ 2,793 (2) % Inbound roaming 32 67 (52) % Other 270 265 2 % Service revenues 3,044 3,125 (3) % Equipment sales 862 1,044 (17) % Total operating revenues 3,906 4,169 (6) % System operations (excluding Depreciation, amortization and accretion reported below) 740 755 (2) % Cost of equipment sold 988 1,216 (19) % Selling, general and administrative 1,368 1,408 (3) % Depreciation, amortization and accretion 656 700 (6) % Loss on impairment of licenses — 3 N/M (Gain) loss on asset disposals, net 17 19 (9) % (Gain) loss on sale of business and other exit costs, net — (1) N/M (Gain) loss on license sales and exchanges, net (2) — N/M Total operating expenses 3,767 4,100 (8) % Operating income $ 139 $ 69 N/M Net income $ 58 $ 35 67 % Adjusted OIBDA (Non-GAAP) 2 $ 818 $ 790 4 % Adjusted EBITDA (Non-GAAP) 2 $ 986 $ 956 3 % Capital expenditures 3 $ 611 $ 717 (15) % N/M - Percentage change not meaningful 1 UScellular recorded an adjustment to correct a prior period error related to the recognition of discounts for certain Prepaid customers, which decreased Service revenue by $5 million in 2023.
Year Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (Dollars in millions) Retail service 1 $ 2,674 $ 2,742 $ 2,793 (2) % (2) % Other 210 201 239 5 % (16) % Service revenues 2,884 2,943 3,032 (2) % (3) % Equipment sales 783 862 1,044 (9) % (17) % Total operating revenues 3,667 3,805 4,076 (4) % (7) % System operations (excluding Depreciation, amortization and accretion reported below) 777 794 807 (2) % (2) % Cost of equipment sold 906 988 1,216 (8) % (19) % Selling, general and administrative 1,298 1,334 1,376 (3) % (3) % Depreciation, amortization and accretion 620 610 655 1 % (7) % Loss on impairment of licenses 136 — 3 N/M N/M (Gain) loss on asset disposals, net 17 19 19 (11) % 3 % (Gain) loss on sale of business and other exit costs, net — — (1) N/M N/M (Gain) loss on license sales and exchanges, net 3 (2) — N/M N/M Total operating expenses 3,757 3,743 4,075 — (8) % Operating income (loss) $ (90) $ 62 $ 1 N/M N/M Adjusted OIBDA (Non-GAAP) 2 $ 719 $ 697 $ 677 3 % 3 % Adjusted EBITDA (Non-GAAP) 2 $ 719 $ 697 $ 677 3 % 3 % Capital expenditures 3 $ 554 $ 580 $ 689 (5) % (16) % N/M - Percentage change not meaningful 1 UScellular recorded an adjustment to correct a prior period error related to the recognition of discounts for certain Prepaid customers, which decreased Service revenue by $5 million in 2023.
Cash and Cash Equivalents (Dollars in millions) The majority of UScellular’s Cash and cash equivalents are held in bank deposit accounts and in money market funds that purchase only debt issued by the U.S. Treasury or U.S. government agencies. Refer to the Consolidated Cash Flow Analysis for additional information related to changes in Cash and cash equivalents.
The primary objective of UScellular's Cash and cash equivalents investment activities is to preserve principal. Cash and Cash Equivalents (Dollars in millions) The majority of UScellular’s Cash and cash equivalents are held in money market funds that purchase only debt issued by the U.S. Treasury or U.S. government agencies.
As of December 31, 2023, the outstanding borrowings under the agreement were $150 million and the unused borrowing capacity was $300 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement. In January 2024, UScellular repaid $50 million under the agreement.
As of December 31, 2024, the outstanding borrowings under the agreement were $2 million and classified as Current portion of long-term debt in the Consolidated Balance Sheet, and the unused borrowing capacity was $448 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement.
An account may include a variety of types of connections such as handsets and connected devices. ▪ Auctions 105, 107, 108 and 110 – Auction 105 was an FCC auction of 3.5 GHz wireless spectrum licenses that started in July 2020 and concluded in September 2020.
An account may include a variety of types of connections such as handsets and connected devices. ▪ Auction 107 – Auction 107 was an FCC auction of 3.7-3.98 GHz wireless spectrum licenses that started in December 2020 and concluded in February 2021. ▪ Churn Rate – represents the percentage of the connections that disconnect service each month.
Such additional costs were accrued and capitalized at the time the licenses were granted, and are adjusted as necessary as the estimated obligation changes. UScellular paid $122 million, $8 million and $36 million related to the additional costs for the years ended December 31, 2023, 2022 and 2021, respectively.
Additionally, UScellular was obligated to pay relocation costs and accelerated relocation incentive payments of $8 million, $122 million, $8 million and $36 million in the years ended December 31, 2024, 2023, 2022 and 2021, respectively. Such additional costs were estimated, accrued and capitalized at the time the licenses were granted and have been adjusted as such costs were finalized.
As part of this strategy, UScellular may seek attractive opportunities to acquire and divest wireless spectrum as deemed necessary. Recent Development On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies have decided to initiate a process to explore a range of strategic alternatives for UScellular.
Announced Transactions and Strategic Alternatives Review On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
The ability of UScellular to complete an offering pursuant to such shelf registration statement is subject to market conditions and other factors at the time. 30 Index to MD&A UScellular, at its discretion, may from time to time seek to retire or purchase its outstanding debt through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise.
UScellular, at its discretion, may from time to time seek to retire or purchase its outstanding debt through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors.
These rates represent the average monthly churn rate for each respective period. ▪ Connected Devices – non-handset devices that connect directly to the UScellular network.
These rates represent the average monthly churn rate for each respective period. ▪ Colocations – represents instances where a third-party wireless carrier rents or leases space on a company-owned tower. ▪ Connected Devices – non-handset devices that connect directly to the UScellular network.
Common Share Repurchase Program There were no share repurchases during 2023. At December 31, 2023 , the total cumulative amount of UScellular Common Shares authorized to be repurchased is 1,927,000 . Depending on its future financial performance, construction, development and acquisition programs, and available sources of financing, UScellular may not have sufficient liquidity or capital resources to make share repurchases.
Depending on its future financial performance, construction, development and acquisition programs, and available sources of financing, UScellular may not have sufficient liquidity or capital resources to make share repurchases. Therefore, there is no assurance that UScellular will make any share repurchases in the future.
Based on these assessments, UScellular concluded that it was more likely than not that the fair value of the unit of accounting exceeded its carrying value. Therefore, no quantitative impairment evaluation was completed. See Note 7 — Intangible Assets in the Notes to Consolidated Financial Statements for information related to wireless spectrum licenses activity in 2023 and 2022.
Based on these assessments, UScellular concluded that it was more likely than not that the fair value of each unit of accounting exceeded its respective carrying value. Therefore, no quantitative impairment evaluation was completed. For purposes of its 2023 impairment test, UScellular had one unit of accounting and used a quantitative market approach to value the wireless spectrum license portfolio.
UScellular paid $30 million of this amount in 2020 and the remainder in March 2021. The wireless spectrum licenses from Auction 107 were granted by the FCC in July 2021. Additionally, UScellular was obligated to pay approximately $179 million in total from 2021 through 2025 related to relocation costs and accelerated relocation incentive payments.
UScellular paid $30 million of this amount in 2020 and the remainder in March 2021 and the wireless spectrum licenses were granted by the FCC in July 2021.
See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information. 35 Index to MD&A Regulatory Matters 5G Fund On October 27, 2020, the FCC adopted rules creating the 5G Fund for Rural America, which will distribute up to $9 billion over ten years to bring 5G wireless broadband connectivity to rural America.
Regulatory Matters 5G Fund On October 27, 2020, the FCC adopted rules creating the 5G Fund for Rural America, which will distribute up to $9 billion over ten years to bring 5G wireless broadband connectivity to rural America. The 5G Fund will be implemented through a two-phase competitive process, using multiround auctions to award support.
(Dollars in millions) Revolving Credit Agreement $ 300 Receivables Securitization Agreement 300 Repurchase Agreement 1 200 Total undrawn borrowing capacity 800 Debt covenant restrictions 1 200 Total available undrawn borrowing capacity $ 600 1 The capacity available under the Repurchase Agreement and the Debt covenant restrictions in the table above relate to the Repurchase Agreement facility that subsequently expired in January 2024. 29 Index to MD&A Financing Revolving Credit Agreement UScellular has an unsecured revolving credit agreement with a maximum borrowing capacity of $300 million.
(Dollars in millions) Revolving Credit Agreement $ 300 Receivables Securitization Agreement 448 Total available undrawn borrowing capacity $ 748 38 Index to MD&A Financing Revolving Credit Agreement UScellular has an unsecured revolving credit agreement with a maximum borrowing capacity of $300 million.
On September 22, 2023, the FCC adopted a Further Notice of Proposed Rulemaking (FNPRM) to continue implementation of the 5G Fund.
The order also provides that over time a growing percentage of the legacy support a carrier receives must be used for 5G deployment. On September 22, 2023, the FCC adopted a Further Notice of Proposed Rulemaking (FNPRM) to continue implementation of the 5G Fund.
Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. This report contains statements that are not based on historical facts, which may be identified by words such as “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects,” “will” and similar expressions.
This report contains statements that are not based on historical facts, which may be identified by words such as “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects,” “will” and similar expressions. These statements constitute and represent “forward looking statements” as this term is defined in the Private Securities Litigation Reform Act of 1995.
UScellular expects promotional aggressiveness by traditional carriers and pricing pressures from cable companies to continue into the foreseeable future. Operating revenues and Operating income have been negatively impacted in current and prior periods, and may be negatively impacted in future periods, by competitive promotional offers to new and existing customers.
UScellular expects promotional aggressiveness by traditional carriers to continue and pricing pressures from cable wireless companies and new entrants to increase into the foreseeable future.
UScellular does not intend to imply that any such items set forth in the reconciliation below are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed appropriate.
UScellular does not intend to imply that any such items set forth in the reconciliation below are non-recurring, infrequent or unusual; such items may occur in the future. Adjusted EBITDA is a segment measure reported to the chief operating decision maker for purposes of assessing the segments' performance.
Postpaid Revenue Year Ended December 31, 2023 2022 2023 vs. 2022 Average Revenue Per User (ARPU) $ 51.01 $ 50.14 2% Average Revenue Per Account (ARPA) $ 130.91 $ 130.39 – Postpaid ARPU increased in 2023 due to favorable plan and product offering mix and an increase in device protection plan revenues, partially offset by an increase in promotional discounts.
Postpaid ARPA was relatively flat in 2024 due to the impacts to Postpaid ARPU, offset by a decrease in the number of connections per account. 2023-2022 Commentary Postpaid ARPU increased in 2023 due to favorable plan and product offering mix and an increase in device protection plan revenues, partially offset by an increase in promotional discounts.
Income Taxes UScellular is included in a consolidated federal income tax return with other members of the TDS consolidated group.
Based on this valuation, the fair value of the wireless spectrum licenses exceeded the respective carrying value by 17% and there was no impairment of wireless spectrum licenses. Income Taxes UScellular is included in a consolidated federal income tax return with other members of the TDS consolidated group.
During 2023, UScellular continued to invest in 5G with a focus on deployment of mid-band spectrum, which will largely overlap portions of areas already covered with low-band 5G service. 5G service deployed over mid-band spectrum will further enhance speed and capacity for UScellular's mobility and fixed wireless services. ▪ UScellular assesses its existing wireless interests on an ongoing basis with a goal of improving the competitiveness of its operations and maximizing its profitability.
In 2019-2023, UScellular focused on 5G coverage and predominantly used low-band spectrum to launch 5G services in portions of substantially all of its markets. During 2023 and 2024, UScellular has focused on deploying 5G over its mid-band spectrum, largely overlapping areas already covered with low-band 5G service to enhance speed and capacity for UScellular’s mobility and fixed wireless services.
Wireless spectrum licenses are tested for impairment at the level of reporting referred to as a unit of accounting. For purposes of its impairment test, UScellular has one unit of accounting. UScellular performed a quantitative impairment assessment in 2023 and a qualitative impairment assessment in 2022. In 2023, a market approach was used to value the wireless spectrum license portfolio.
Wireless spectrum licenses are tested for impairment at the level of reporting referred to as a unit of accounting.
The order provides that the 5G Fund be in lieu of the previously proposed fund (the Phase II Connect America Mobility Fund) for the development of 4G LTE. The order also provides that over time a growing percentage of the legacy support a carrier receives must be used for 5G deployment.
The winning bidders will be required to meet certain minimum speed requirements and interim and final deployment milestones. The order provides that the 5G Fund be in lieu of the previously proposed fund (the Phase II Connect America Mobility Fund) for the development of 4G LTE.
Connections are associated with all types of devices that connect directly to the UScellular network. ▪ Universal Service Fund (USF) – a system of telecommunications collected fees and support payments managed by the FCC intended to promote universal access to telecommunications services in the United States. ▪ VoLTE – Voice over Long-Term Evolution is a technology specification that defines the standards and procedures for delivering voice communications and related services over 4G LTE networks. 24 Index to MD&A Operational Overview As of December 31, 2023 2022 Retail Connections – End of Period Postpaid 4,106,000 4,247,000 Prepaid 451,000 493,000 Total 4,557,000 4,740,000 Year Ended December 31, 2023 2022 2023 vs. 2022 Postpaid Activity and Churn Gross Additions Handsets 339,000 397,000 (15) % Connected Devices 178,000 162,000 10 % Total Gross Additions 517,000 559,000 (8) % Net Additions (Losses) Handsets (145,000) (110,000) (32) % Connected Devices 7,000 (23,000) N/M Total Net Additions (Losses) (138,000) (133,000) (4) % Churn Handsets 1.10 % 1.12 % Connected Devices 2.77 % 2.95 % Total Churn 1.31 % 1.34 % N/M - Percentage change not meaningful Total postpaid handset net losses increased in 2023 due primarily to lower gross additions resulting from aggressive industry-wide competition.
See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information. 29 Index to MD&A Wireless Operations As of December 31, 2024 2023 2022 Retail Connections – End of Period Postpaid 3,985,000 4,106,000 4,247,000 Prepaid 448,000 451,000 493,000 Total 4,433,000 4,557,000 4,740,000 Year Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Postpaid Activity and Churn Gross Additions Handsets 314,000 339,000 397,000 (7) % (15) % Connected Devices 172,000 178,000 162,000 (3) % 10 % Total Gross Additions 486,000 517,000 559,000 (6) % (8) % Net Additions (Losses) Handsets (123,000) (145,000) (110,000) 15 % (32) % Connected Devices 14,000 7,000 (23,000) 100 % N/M Total Net Additions (Losses) (109,000) (138,000) (133,000) 21 % (4) % Churn Handsets 1.04 % 1.10 % 1.12 % Connected Devices 2.53 % 2.77 % 2.95 % Total Churn 1.23 % 1.31 % 1.34 % N/M - Percentage change not meaningful 2024-2023 Commentary Total postpaid handset net losses decreased in 2024 due primarily to lower defections as a result of improvements in churn, partially offset by lower gross additions as a result of continued aggressive industry-wide competition and a decrease in the pool of available customers.
The UScellular issuer credit ratings as of December 31, 2023, and the dates such ratings were re-affirmed were as follows: Rating Agency Rating Outlook Moody's (re-affirmed October 2023) Ba1 stable outlook Standard & Poor's (issued August 2023) BB watch-developing outlook Fitch Ratings (re-affirmed March 2023) BB+ stable outlook Following the announcement on August 4, 2023 related to the review of strategic alternatives for UScellular, Standard & Poor's placed the BB issuer credit rating for UScellular on CreditWatch with developing implications.
The UScellular issuer credit ratings as of December 31, 2024, and the dates such ratings were issued were as follows: Rating Agency Rating Outlook Moody's (issued May 2024) Ba1 rating under review Standard & Poor's (issued August 2023) BB watch-developing outlook Fitch Ratings (issued May 2024) BB+ rating watch negative The UScellular credit ratings may be impacted in the future based on the outcomes of the T-Mobile, Verizon and AT&T transactions and the remaining UScellular business, among other factors.

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