To Our Shareholders
U.S. Cellular made progress in important areas in 2009, despite the weak economy and intense competition. Data revenue increased 33 percent, contributing 17 percent of service revenues, and sales of smart phones and premium phones represented 20 percent of total sales.
Though net retail customer additions were modest, retail postpay and prepaid customers responded well to new service plans introduced midyear. At the end of 2009:
- U.S. Cellular had 6.1 million total customers, including 5.7 million retail customers; and
- 95 percent of our retail customers were in our target postpay segment.
The increasing cost of adding and retaining customers reduced profitability, as did the expected loss of high-margin inbound roaming revenue resulting from industry consolidation. We do expect increases in data use and voice minutes of use from U.S. Cellular’s roaming partners to help stabilize inbound roaming revenues toward the latter half of 2010.
Achieving a return on capital (ROC) greater than our weighted average cost of capital remains an important long-term goal for U.S. Cellular. With that goal in mind, we are moving forÂward with investments in several major enablement initiatives that we expect will stimulate and support growth and increase efficiency over the long term. In the short term, however, spending on these initiatives is putting pressure on our profitability and ROC.
U.S. Cellular authorized a new program in November to repurchase up to 1.3 million shares per year, with the ability to carry unused purchases over to subsequent years. We repurchased 887,000 shares in 2009, for $33.6 million.