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United States Cellular Corporation
Management’s Discussion and Analysis of Financial Condition and Results of Operations
United States Cellular Corporation (‘‘U.S. Cellular’’) owns, operates and invests in wireless markets
throughout the United States. U.S. Cellular is an 84%-owned subsidiary of Telephone and Data
Systems, Inc. (‘‘TDS’’).
The following discussion and analysis should be read in conjunction with U.S. Cellular’s audited
consolidated financial statements and the description of U.S. Cellular’s business included in Item 1 of the
U.S. Cellular Annual Report on Form 10-K (‘‘Form 10-K’’) for the year ended December 31, 2012. The
discussion and analysis contained herein refers to consolidated data and results of operations, unless
otherwise noted.
OVERVIEW
The following is a summary of certain selected information contained in the comprehensive
Management’s Discussion and Analysis of Financial Condition and Results of Operations that follows.
The overview does not contain all of the information that may be important. You should carefully read the
entire Management’s Discussion and Analysis of Financial Condition and Results of Operations and not
rely solely on the overview.
U.S. Cellular’s consolidated operating markets cover approximately 5.8 million customers in five
geographic market areas in 26 states. As of December 31, 2012, U.S. Cellular’s average penetration rate
in its consolidated operating markets was 12.3%. U.S. Cellular operates on a customer satisfaction
strategy, striving to meet or exceed customer needs by providing a comprehensive range of wireless
products and services, excellent customer support, and a high-quality network. U.S. Cellular’s business
development strategy is to obtain interests in and access to wireless licenses in certain spectrum bands
in areas overlapping, adjacent to or in proximity to its other wireless licenses, thereby building
contiguous operating market areas with strong spectrum positions. U.S. Cellular anticipates that grouping
its operations into market areas will continue to provide it with certain economies in its capital and
operating costs.
Financial and operating highlights in 2012 included the following:
• Total consolidated customers were 5,798,000 at December 31, 2012, including 5,557,000 retail
customers (96% of total).
• In November 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of
Sprint Nextel Corporation. U.S. Cellular will transfer to Sprint certain rights and assets, and Sprint will
assume certain liabilities, related to U.S. Cellular’s Chicago, central Illinois, St. Louis and certain
Indiana/Michigan/Ohio markets, in consideration for $480 million in cash at closing, subject to pro-
rations of certain assets and liabilities. See ‘‘Divestiture Transaction’’ below for additional information.
• In May 2012, U.S. Cellular began offering U Prepaid, a no-contract wireless service, in select Walmart
stores within its service areas. U.S. Cellular began offering a postpaid option through Walmart in
October 2012 and continues to explore new distribution options.
• In March 2012, U.S. Cellular, in conjunction with King Street Wireless L.P., began offering fourth
generation Long-term Evolution (‘‘4G LTE’’) service; as of December 31, 2012, the 4G LTE network
covered approximately 61% of U.S. Cellular’s postpaid customers. 4G LTE enhances the wireless
experience by significantly increasing both the speed and data capacity available compared to 3G
networks.
• In March 2012, U.S. Cellular sold the majority of the assets and liabilities of a wireless market for
$49.8 million in cash net of working capital adjustments. In connection with the sale, a $4.2 million
gain was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated
Statement of Operations.
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