Gabelli & Company Comments on US Cellular (USM)

In a report released today, Gabelli & Company commented on US Cellular USM. Gabelli & Company was bullish on the wireless operator. Gabelli writes, “US Cellular reported mixed 1Q results. Revenues were slightly better than expected, while EBITDA was slightly weaker than expected. Retail customer loss increased over 4Q, while retail service ARPU, postpaid ARPU, and postpaid churn improved sequentially and year-over-year. Recommendation: BUY. USM is trading at 4.7x 2011E and 4.1x 2012 EBITDA, at a significant discount to recent wireless transaction multiples. The company is increasing its smartphone penetration and migrating subscribers to the Belief Plans at a rapid rate (which should drive ARPU and improve churn in the long term). We estimate 2011 PMV at $74 a share (based on 7.5x FY EBITDA), growing to $85 in 2012.” Gabelli & Company maintains a Buy rating on US Cellular Corp. Shares of the company finished the trading day on Friday down slightly, closing at $48.92 after opening at $49.11.