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Investor Presentation June 13, 2002

Investor Presentation June 13, 2002. JOHN E. ROONEY President & Chief Executive Officer. Safe Harbor All Information Set Forth In This Presentation, Except Historical And Factual Information, Represents Forward-Looking Statements.This

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Investor Presentation June 13, 2002

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  1. Investor PresentationJune 13, 2002

  2. JOHN E. ROONEY President & Chief Executive Officer

  3. Safe Harbor All Information Set Forth In This Presentation, Except Historical And Factual Information, Represents Forward-Looking Statements.This Includes All Statements About The Company’s Plans, Beliefs, Estimates And Expectations. These Statements Are Based On Current Estimates And Projections, Which Involve Certain Risks And Uncertainties That Could Cause Actual Results To Differ Materially From Those In The Forward-Looking Statements. Important Factors That May Affect Forward-Looking Statements Include, But Are Not Limited To: General Economic And Business Conditions, Both Nationally And In The Regions In Which The Company Operates; Technology Changes; Competition; Changes In Business Strategy Or Development Plans; Acquisitions/Divestitures Of Properties And/Or Licenses; Changes In Governmental Regulations; Changes In The Value Of Investments; Availability of Future Financing;And Changes In Growth In Cellular Customers, Penetration Rates, Churn Rates And Roaming Rates. Investors Are Encouraged To Consider These And Other Risks And Uncertainties That Are Discussed In Documents Filed By The Company With Securities And Exchange Commission (“SEC”).

  4. USM Overview • Eighth Largest Wireless Service Provider • Total Cellular Pops 27M • Serves 3.5M Customers - 13.2% Penetration • Pervasive Distribution... Nearly 1,800 Points Of Presence • Extensive Network Of Over 3,000 Cell Sites • #1 Market Share In All Of Its Largest Markets • Profitable And Financially Strong

  5. Strategy • Regional Cluster Markets • Drive Profitable Growth With: • Outstanding Customer Service • Broad Local Distribution • Superior, High Quality Network • Maintain Strong Credit Profile With Positive Earnings

  6. Chicago Acquisition • Currently Operates As PrimeCo • 20 Megahertz PCS Spectrum Covering A Population Of 13 Million. • Assets Include Spectrum Plus: • A CDMA Based Network With 500 Cell Sites • 350,000 Customers Generating $230 Million Of Annual Revenue • Purchase Price $610 Million

  7. Strategic Footprint U.S. Cellular Properties Currently Majority Owned Or Managed Chicago MTA Licensed Area Owned By PrimeCo Incremental Licensed Service Areas Post Acquisition Of PrimeCo

  8. Chicago - Acquisition Strategy • Complementary Footprint • Stronger Regional Competitor • Elimination Of Chicago Roaming Expenses • Economies Of Scale - Operating, Marketing & Technology • Similar CDMA Technology • Local Ownership And Control • Potential For Growth

  9. Proven Clustering Strategy • Regional Focus Works • Leverage Strong Position • Acquisitions And Swaps

  10. Strategic Footprint U.S. Cellular MSAs And RSAs Currently Owned And Managed PCS BTAs Owned Directly Or Through Joint Ventures (Incremental Territory Only)

  11. Strategy • Regional Cluster Markets • Drive Profitable Growth With: • Outstanding Customer Service • Broad Local Distribution • Superior, High Quality Network • Maintain Strong Credit Profile With Positive Earnings

  12. Outstanding Customer Service • New Service-Focused Culture • Customer Service Delivered With Multiple Vehicles • Emphasis On Associate Satisfaction • Proactive Contact Of Customers To Analyze Rate Plans • Winner Of 2001 WirelessReview Industry Titan Award For Customer Service • Winner Of 24 Awards In 2001-2002 As Outstanding Wireless Service Provider In Local Markets

  13. 2001 Industry Leading Churn Rates

  14. Marketing Strategy • Over 1,800 Points Of Distribution Including: • Over 450 Company Stores & Kiosks • 1,300 Local Dealer Locations • A Direct Sales Force Focused On Business Accounts • Emerging New Channels (Internet & Telesales) • Local Distribution Aids In Delivery Of Customer Service. • Full Suite Of Product Offerings • National, Regional & Local Plans • Post & Prepay Offerings • SMS

  15. Superior, High Quality Network • Current Network Includes Over 3,000 Cell Sites • 72% Of Customers On Digital Plans At 3/31/02. • Dropped Calls Fell From 1.5% To 1.3% Over Last 2 Years, Despite 55% CAGR In MOUs. • 32% Of Population Served By CDMA Today; 68% By TDMA. • After Chicago Acquisition And Conversions 70% Of Population Will Have CDMA By 2nd Quarter 2003.

  16. Summary • Regional Strategy • Drive Profitable Growth By Focusing On Customer Satisfaction • Chicago Acquisition Is Consistent With Strategy • USM Has Management And Financial Strength To Succeed

  17. KENNETH R. MEYERS Executive Vice President & Chief Financial Officer

  18. Financial Highlights • Proven Ability To Execute Business Strategy • Highly Profitable Customer Base • High Lifetime Revenue • Low Cash Costs Per Subscriber • Strong Balance Sheet With Stable Cash Flows • Commitment To Investment Grade Credit Ratings

  19. Highly Profitable Customer Base Life Time Cust. RevenueChurn Rate U. S. Cellular $2,116 1.9% Alltel $2,005 2.3% AT&T $2,173 2.9% Cingular $1,848 2.9% Sprint $2,406 2.6% Verizon $1,930 2.5% Voicestream $1,117 4.4% Based On 2001 Average of Quarterly Results As Reported By Various Analysts

  20. Highly Profitable Customer Base (cont’d) Cash Costs Per Subscriber U. S. Cellular $24 Alltel 24 AT&T 37 Cingular 28 Sprint 37 Verizon 23 Voicestream 40 Based On 2001 Average of Quarterly Results As Reported By Various Analysts

  21. Operational Metrics 20002001%1Q011Q02% Local ARPU $36.52 $35.68 -2% $34.39 $35.79 +4% Total ARPU $49.21 $46.28 -6% $44.65 $44.14 -1% Service Revenue $1,654M $1,826M +10% $424M $461M +9% Monthly Churn 2.0% 1.9% 1.9% 21% Ending Subs 3.061M 3.461M +13% 3.221M 3.504M +9% Operating Cash Flow $558M $618M +11% $130M $152M +17% Penetration 12.3% 13.5% +10% 12.5% 13.2% +5% (Cellular Markets Only)

  22. Chicago 20 MHz Acquisition • Purchase Price $610 Million Represents: • 2.7 Times 2000 Revenue • $47 Per Pop All In • $28 Per Pop Excluding Fixed Assets • Finance Primarily With Debt • Vodaphone Assets Have Been Monetized

  23. Recent Comparable Transactions Total Price Per DateTargetAcquirorPops (Mil)SubPop 2/11/02 Georgia PCS U.S. Unwired 1.4 $2,471 $63.70 12/20/01 IWO U.S. Unwired 6.1 $4,437 $91.60 10/8/01 Telecorp AT&T Wireless 37.0 $5,919 $169.40 5/10/02 PrimeCo U.S. Cellular 13.1 $1,737 $46.41 Commun. Source: Industry Analyst Reports

  24. Financial Strength • Investment Grade Rating • Moody’s A3 • S&P A- • Low Debt Levels • Additional Financial Assets • Tower Portfolio • Stock Investments Totaling $272 Million • Non Operating Cellular Investments

  25. Summary • Regional Strategy • Drive Profitable Growth By Focusing On Customer Satisfaction • Chicago Acquisition Is Consistent With Strategy • USM Has Management And Financial Strength To Succeed

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