US Cellular 2008 Annual Report Download - page 126

For the Year Ended December 31,(4) 2008 2007 2006
Net customer additions(5) ................................ 91,000 281,000 310,000
Net retail customer additions(5) ............................ 149,000 333,000 297,000
Average monthly service revenue per customer(6) ............... $ 53.23 $ 51.17 $ 47.23
Postpay churn rate(7) ................................... 1.5% 1.4% 1.6%
(1) Amounts include results for U.S. Cellular’s consolidated operating markets as of December 31.
(2) Calculated using 2007, 2006 and 2005 Claritas population estimates for 2008, 2007 and 2006,
respectively. ‘‘Total market population of consolidated operating markets’’ is used only for the
purposes of calculating market penetration of consolidated operating markets, which is calculated by
dividing customers by the total market population (without duplication of population in overlapping
markets).
The total market population and penetration measures for consolidated operating markets apply to
markets in which U.S. Cellular provides wireless service to customers. For comparison purposes,
total market population and penetration related to all consolidated markets in which U.S. Cellular
owns an interest were 83,014,000 and 7.5%, 82,371,000 and 7.4%, and 55,543,000 and 10.5% as of
December 31, 2008, 2007 and 2006, respectively.
As a result of exchange transactions with AT&T that closed in August 2003, U.S. Cellular obtained
rights to acquire majority interests in additional licenses, some of which have been previously
acquired and are reflected in the total market population of consolidated markets. During 2008, U.S.
Cellular exercised its rights to acquire all but one of the remaining licenses pursuant to this
exchange agreement. The licenses that were exercised but not yet acquired as of December 31,
2008 will increase total market population of consolidated markets by 1,555,000 to 84,569,000. The
exercise of these rights did not require U.S. Cellular to provide any additional consideration to AT&T,
other than consideration already provided in conjunction with the August 2003 exchange transaction.
Therefore, exercise of these rights did not cause a change in U.S. Cellular’s Licenses balance in
2008. U.S. Cellular continues to have a right that does not have a stated expiration date to acquire a
majority interest in one license under the exchange agreement.
(3) U.S. Cellular’s customer base consists of the following types of customers:
2008 2007 2006
Customers on postpay service plans in which the end user is a
customer of U.S. Cellular (‘‘postpay customers’’) .......... 5,420,000 5,269,000 4,912,000
Customers on prepay service plans in which the end user is a
customer of U.S. Cellular (‘‘prepay customers’’) ........... 287,000 295,000 313,000
End user customers acquired through U.S. Cellular’s
agreements with third parties (‘‘reseller customers’’) ....... 489,000 538,000 590,000
Total customers ................................... 6,196,000 6,102,000 5,815,000
(4) Amounts include results for U.S. Cellular’s consolidated operating markets for the period January 1
through December 31; operating markets acquired during a particular period are included as of the
acquisition date.
(5) ‘‘Net customer additions’’ represents the number of net customers added to U.S. Cellular’s overall
customer base through all of its marketing distribution channels, excluding any customers
transferred through acquisitions, divestitures or exchanges. ‘‘Net retail customer additions’’
represents the number of net customers added to U.S. Cellular’s customer base through its
marketing distribution channels, excluding net reseller customers added to its reseller customer base
and excluding any customers transferred through acquisitions, divestitures or exchanges.
(6) Management uses this measurement to assess the amount of service revenue that U.S. Cellular
generates each month on a per customer basis. Variances in this measurement are monitored and
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