UNITED STATES CELLULAR CORP

Total postpaid handset net losses decreased for the three months ended September 30, 2024, when compared to the same period last year due primarily to lower defections as a result of improvements in churn.

Total postpaid handset net losses increased for the nine months ended September 30, 2024 when compared to the same period last year due to lower gross additions as a result of a decrease in the pool of available customers and continued aggressive industry-wide competition. This was partially offset by lower defections as a result of improvements in churn.

Total postpaid connected device net additions decreased for the three months ended September 30, 2024, when compared to the same period last year due to lower demand for home internet and connected watches. This was offset by a decrease in tablet churn.

Total postpaid connected device net additions increased for the nine months ended September 30, 2024, when compared to the same period last year due to a decrease in tablet, hotspot and home phone defections as a result of improvements in churn.

Postpaid Revenue

Postpaid ARPU and ARPA increased for the three and nine months ended September 30, 2024, when compared to the same period last year, due to an increase in favorable plan and product offering mix and cost recovery surcharges.

Financial Overview — Wireless

2 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

Operating Revenues

Three Months Ended September 30, 2024 and 2023

Operating Revenues

Nine Months Ended September 30, 2024 and 2023

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

Key components of changes in the statement of operations line items were as follows:

Total operating revenues

Retail service revenues decreased for the three and nine months ended September 30, 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.

Equipment sales revenues decreased for the three months ended September 30, 2024, due primarily to a decline in smartphone devices sold due to lower upgrades.

Equipment sales revenues decreased for the nine months ended September 30, 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. 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. Additionally, other wireless service providers have more developed networks and coverage as well as lower costs per subscriber than UScellular, which has negatively affected and may continue to negatively affect UScellular's ability to compete over time. Operating revenues and Operating income (loss) have been negatively impacted by these factors in current and prior periods, and are expected to be negatively impacted in future periods.

Total operating expenses

Total operating expenses for the nine months ended September 30, 2023 include $9 million of severance and related expenses associated with a reduction in workforce that was recorded in the first quarter of 2023. These severance expenses are included in System operations expenses and Selling, general and administrative expenses.

System operations expenses

System operations expenses decreased for the three and nine months ended September 30, 2024, due primarily to a decrease in expenses driven by the shutdown of the 3G Code Division Multiple Access (CDMA) network in the first quarter of 2024, partially offset by increases in outbound roaming usage and maintenance, utilities, and cell site expenses.

Cost of equipment sold

Cost of equipment sold decreased for the three months ended September 30, 2024, due primarily to a decline in smartphone devices sold due to lower upgrades.

Cost of equipment sold decreased for the nine months ended September 30, 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.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased for the three and nine months ended September 30, 2024, due to decreases in various general and administrative expenses, sales related expenses and bad debts expense, partially offset by an increase related to the strategic alternatives review expenses of $4 million and $23 million, respectively.

Loss on impairment of licenses

Loss on impairment of licenses increased for the three and nine months ended September 30, 2024, due to the impairment of certain wireless spectrum licenses recorded during the third quarter of 2024. See Note 8 — Intangible Assets for a detailed discussion regarding this impairment.