UNITED STATES CELLULAR CORP, 10-Q filed on 10/31/2019
Quarterly Report
v3.19.3
Document And Entity Information
9 Months Ended
Sep. 30, 2019
shares
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Sep. 30, 2019
Document Transition Report false
Entity File Number 001-09712
Entity Registrant Name UNITED STATES CELLULAR CORPORATION
Entity Central Index Key 0000821130
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2019
Document Fiscal Period Focus Q3
Amendment Flag false
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 62-1147325
Entity Address, Address Line One 8410 West Bryn Mawr
Entity Address, City or Town Chicago
Entity Address, State or Province IL
Entity Address, Postal Zip Code 60631
City Area Code (773)
Local Phone Number 399-8900
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Accelerated Filer
Smaller Reporting Company false
Emerging Growth Company false
Entity Shell Company false
Common Shares  
Title of 12(b) Security Common Shares, $1 par value
Trading Symbol USM
Security Exchange Name NYSE
Entity Common Stock, Shares Outstanding 53,140,600
6.95% Senior Notes  
Title of 12(b) Security 6.95% Senior Notes due 2060
Trading Symbol UZA
Security Exchange Name NYSE
7.25% 2063 Senior Notes  
Title of 12(b) Security 7.25% Senior Notes due 2063
Trading Symbol UZB
Security Exchange Name NYSE
7.25% 2064 Senior Notes  
Title of 12(b) Security 7.25% Senior Notes due 2064
Trading Symbol UZC
Security Exchange Name NYSE
Series A Common Shares  
Entity Common Stock, Shares Outstanding 33,005,900
v3.19.3
Consolidated Statement of Operations - USD ($)
shares in Millions, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Operating revenues        
Total operating revenues $ 1,031 $ 1,001 $ 2,970 $ 2,916
Operating expenses        
Selling, general and administrative (including charges from affiliates of $22 million and $20 million, respectively, for the three months, and $61 million, and $60 million, respectively, for the nine months) 358 346 1,027 1,014
Depreciation, amortization and accretion 181 160 524 478
(Gain) loss on asset disposals, net 5 3 13 5
(Gain) loss on sale of business and other exit costs, net 0 0 (1) 0
(Gain) loss on license sales and exchanges, net 2 0 0 (18)
Total operating expenses 1,011 967 2,855 2,761
Operating income 20 34 115 155
Investment and other income (expense)        
Equity in earnings of unconsolidated entities 44 42 128 120
Interest and dividend income 4 4 14 10
Interest expense (29) (29) (87) (87)
Total investment and other income 19 17 55 43
Income before income taxes 39 51 170 198
Income tax expense 15 14 55 55
Net income 24 37 115 143
Less: Net income attributable to noncontrolling interests, net of tax 1 1 6 14
Net income attributable to U.S. Cellular shareholders $ 23 $ 36 $ 109 $ 129
Basic weighted average shares outstanding (in shares) 86 86 87 85
Basic earnings per share attributable to U.S. Cellular shareholders (USD per share) $ 0.27 $ 0.42 $ 1.26 $ 1.51
Diluted weighted average shares outstanding (in shares) 88 87 88 86
Diluted earnings per share attributable to U.S. Cellular shareholders (USD per share) $ 0.27 $ 0.41 $ 1.24 $ 1.49
Service        
Operating revenues        
Total operating revenues $ 774 $ 759 $ 2,272 $ 2,224
Operating expenses        
Cost of equipment sold 199 200 568 566
Equipment sales        
Operating revenues        
Total operating revenues 257 242 698 692
Operating expenses        
Cost of equipment sold $ 266 $ 258 $ 724 $ 716
v3.19.3
Consolidated Statement of Operations (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Operating expenses        
Selling, general and administrative, charges from affiliates $ 22 $ 20 $ 61 $ 60
v3.19.3
Consolidated Statement of Cash Flows - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash flows from operating activities    
Net income $ 115 $ 143
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities    
Depreciation, amortization and accretion 524 478
Bad debts expense 77 67
Stock-based compensation expense 32 26
Deferred income taxes, net (34) (4)
Equity in earnings of unconsolidated entities (128) (120)
Distributions from unconsolidated entities 99 90
(Gain) loss on asset disposals, net 13 5
(Gain) loss on sale of business and other exit costs, net (1) 0
(Gain) loss on license sales and exchanges, net 0 (18)
Other operating activities 3 2
Changes in assets and liabilities from operations    
Accounts receivable (35) (1)
Equipment installment plans receivable (42) (88)
Inventory 3 15
Accounts payable (4) 21
Customer deposits and deferred revenues (1) (5)
Accrued taxes 81 1
Accrued interest 9 9
Other assets and liabilities (24) (21)
Net cash provided by operating activities 687 600
Cash flows from investing activities    
Cash paid for additions to property, plant and equipment (439) (277)
Cash paid for licenses (257) (2)
Cash received from investments 29 50
Cash paid for investments (11) 0
Cash received from divestitures and exchanges 32 23
Other investing activities (1) 3
Net cash used in investing activities (647) (203)
Cash flows from financing activities    
Repayment of long-term debt (14) (14)
Common Shares reissued for benefit plans, net of tax payments (8)  
Common Shares reissued for benefit plans, net of tax payments   7
Repurchase of Common Shares (21) 0
Distributions to noncontrolling interests (3) (5)
Other financing activities (2) (5)
Net cash used in financing activities (48) (17)
Net increase (decrease) in cash, cash equivalents and restricted cash (8) 380
Cash, cash equivalents and restricted cash    
Beginning of period 583 352
End of period $ 575 $ 732
v3.19.3
Consolidated Balance Sheet - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Current assets    
Cash and cash equivalents $ 570 $ 580
Short-term investments 0 17
Accounts receivable    
Customers and agents, less allowances of $69 and $66, respectively 899 908
Roaming 34 20
Affiliated 0 2
Other, less allowances of $1 and $2, respectively 60 46
Inventory, net 139 142
Prepaid expenses 49 63
Other current assets 19 34
Total current assets 1,770 1,812
Assets held for sale 9 54
Licenses 2,461 2,186
Investments in unconsolidated entities 471 441
Property, plant and equipment    
In service and under construction 8,088 7,778
Less: Accumulated depreciation and amortization 5,944 5,576
Property, plant and equipment, net 2,144 2,202
Operating lease right-of-use assets 897 0
Other assets and deferred charges 539 579
Total assets [1] 8,291 7,274
Current liabilities    
Current portion of long-term debt 19 19
Accounts payable    
Affiliated 8 9
Trade 329 304
Customer deposits and deferred revenues 155 157
Accrued taxes 88 30
Accrued compensation 68 78
Short-term operating lease liabilities 104 0
Other current liabilities 78 94
Total current liabilities 849 691
Liabilities held for sale 1 1
Deferred liabilities and credits    
Deferred income tax liability, net 477 510
Long-term operating lease liabilities 864 0
Other deferred liabilities and credits 312 389
Long-term debt, net 1,592 1,605
Commitments and contingencies
Noncontrolling interests with redemption features 11 11
U.S. Cellular shareholders’ equity    
Series A Common and Common Shares Authorized 190 shares (50 Series A Common and 140 Common Shares) Issued 88 shares (33 Series A Common and 55 Common Shares) Outstanding 86 shares (33 Series A Common and 53 Common Shares) Par Value ($1.00 per share) ($33 Series A Common and $55 Common Shares) 88 88
Additional paid-in capital 1,622 1,590
Treasury shares, at cost, 2 Common Shares (70) (65)
Retained earnings 2,532 2,444
Total U.S. Cellular shareholders' equity 4,172 4,057
Noncontrolling interests 13 10
Total equity 4,185 4,067
Total liabilities and equity [1] $ 8,291 $ 7,274
[1]
The consolidated total assets as of September 30, 2019 and December 31, 2018, include assets held by consolidated variable interest entities (VIEs) of $927 million and $868 million, respectively, which are not available to be used to settle the obligations of U.S. Cellular. The consolidated total liabilities as of September 30, 2019 and December 31, 2018, include certain liabilities of consolidated VIEs of $20 million and $23 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of U.S. Cellular. See Note 10Variable Interest Entities for additional information.
v3.19.3
Consolidated Balance Sheet (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Accounts receivable    
Customer and agent allowances $ 69 $ 66
Other allowances $ 1 $ 2
U.S. Cellular shareholders’ equity    
Authorized shares (in shares) 190,000,000 190,000,000
Issued shares (in shares) 88,000,000 88,000,000
Outstanding shares (in shares) 86,000,000 86,000,000
Par value $ 88 $ 88
Variable Interest Entities VIEs    
Total VIE assets that can be used to settle only the VIEs' obligations 927 868
Total VIE liabilities for which creditors have no recourse $ 20 $ 23
Series A Common Shares    
U.S. Cellular shareholders’ equity    
Authorized shares (in shares) 50,000,000 50,000,000
Issued shares (in shares) 33,000,000 33,000,000
Outstanding shares (in shares) 33,000,000 33,000,000
Par value per share (USD per share) $ 1 $ 1
Par value $ 33 $ 33
Common Shares    
U.S. Cellular shareholders’ equity    
Authorized shares (in shares) 140,000,000 140,000,000
Issued shares (in shares) 55,000,000 55,000,000
Outstanding shares (in shares) 53,000,000 53,000,000
Par value per share (USD per share) $ 1 $ 1
Par value $ 55 $ 55
Treasury shares (in shares) 2,000,000 2,000,000
v3.19.3
Consolidated Statement of Changes in Equity - USD ($)
$ in Millions
Total
Series A Common and Common shares
Additional paid-in capital
Treasury shares
Retained earnings
Total U.S. Cellular shareholders' equity
Noncontrolling interests
Cumulative effect of accounting change $ 174       $ 173 $ 173 $ 1
Beginning balance at Dec. 31, 2017 3,687 $ 88 $ 1,552 $ (120) 2,157 3,677 10
Net income attributable to U.S. Cellular shareholders 129       129 129  
Net income attributable to noncontrolling interests classified as equity 2         0 2
Incentive and compensation plans 7     36 (29) 7  
Stock-based compensation awards 26   26     26  
Distributions to noncontrolling interests (2)         0 (2)
Ending balance at Sep. 30, 2018 4,023 88 1,578 (84) 2,430 4,012 11
Beginning balance at Jun. 30, 2018 3,971 88 1,569 (99) 2,402 3,960 11
Net income attributable to U.S. Cellular shareholders 36       36 36  
Net income attributable to noncontrolling interests classified as equity 1         0 1
Incentive and compensation plans 7     15 (8) 7  
Stock-based compensation awards 9   9     9  
Distributions to noncontrolling interests (1)         0 (1)
Ending balance at Sep. 30, 2018 4,023 88 1,578 (84) 2,430 4,012 11
Cumulative effect of accounting change 2       2 2  
Beginning balance at Dec. 31, 2018 4,067 88 1,590 (65) 2,444 4,057 10
Net income attributable to U.S. Cellular shareholders 109       109 109  
Net income attributable to noncontrolling interests classified as equity 5         0 5
Repurchase of Common Shares (21)     (21)   (21)  
Incentive and compensation plans (8)   (1) 16 (23) (8)  
Stock-based compensation awards 33   33     33  
Distributions to noncontrolling interests (2)         0 (2)
Ending balance at Sep. 30, 2019 4,185 88 1,622 (70) 2,532 4,172 13
Beginning balance at Jun. 30, 2019 4,175 88 1,615 (50) 2,509 4,162 13
Net income attributable to U.S. Cellular shareholders 23       23 23  
Repurchase of Common Shares (21)     (21)   (21)  
Incentive and compensation plans 1     1 0 1  
Stock-based compensation awards 7   7     7  
Ending balance at Sep. 30, 2019 $ 4,185 $ 88 $ 1,622 $ (70) $ 2,532 $ 4,172 $ 13
v3.19.3
Basis of Presentation
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Note 1 Basis of Presentation
United States Cellular Corporation (U.S. Cellular), a Delaware Corporation, is an 82%-owned subsidiary of Telephone and Data Systems, Inc. (TDS).
The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in which it has a controlling financial interest, general partnerships in which U.S. Cellular has a majority partnership interest and certain entities in which U.S. Cellular has a variable interest that require consolidation under GAAP. All material intercompany accounts and transactions have been eliminated.
The unaudited consolidated financial statements included herein have been prepared by U.S. Cellular pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, U.S. Cellular believes that the disclosures included herein are adequate to make the information presented not misleading. Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in U.S. Cellular’s Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2018.
The accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items, unless otherwise disclosed) necessary for the fair statement of U.S. Cellular’s financial position as of September 30, 2019 and December 31, 2018, its results of operations and changes in equity for the three and nine months ended September 30, 2019 and 2018, and its cash flows for the nine months ended September 30, 2019 and 2018. The Consolidated Statement of Comprehensive Income was not included because comprehensive income for the three and nine months ended September 30, 2019 and 2018, equaled net income. These results are not necessarily indicative of the results to be expected for the full year. U.S. Cellular has not changed its significant accounting and reporting policies from those disclosed in its Form 10-K for the year ended December 31, 2018, except as disclosed in Note 8Leases.
Restricted Cash
U.S. Cellular presents restricted cash with cash and cash equivalents in the Consolidated Statement of Cash Flows. The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Cash and cash equivalents
$
570

 
$
580

Restricted cash included in Other current assets
5

 
3

Cash, cash equivalents and restricted cash in the statement of cash flows
$
575

 
$
583


Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. U.S. Cellular is required to adopt ASU 2016-13 on January 1, 2020, using the modified retrospective approach. Early adoption is permitted; however, U.S. Cellular does not intend to adopt early. The adoption of ASU 2016-13 is not expected to have a significant impact on U.S. Cellular's financial position or results of operations.
v3.19.3
Revenue Recognition
9 Months Ended
Sep. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 2 Revenue Recognition
Disaggregation of Revenue
In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time.  
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Dollars in millions)
 
 
 
 
 
 
 
Revenues from contracts with customers:
 
 
 
 
 
 
 
Retail service
$
663

 
$
659

 
$
1,984

 
$
1,960

Inbound roaming
54

 
50

 
132

 
116

Other service
34

 
34

 
101

 
99

Service revenues from contracts with customers
751

 
743

 
2,217

 
2,175

Equipment sales
257

 
242

 
698

 
692

Total revenues from contracts with customers1
$
1,008

 
$
985

 
$
2,915

 
$
2,867

1  
Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.
Contract Balances
The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Accounts receivable
 
 
 
Customer and agents
$
899

 
$
908

Roaming
34

 
20

Other
56

 
32

Total1
$
989

 
$
960

1
Accounts receivable line items presented in this table will not agree to amounts presented in the Consolidated Balance Sheet as the amounts in this table only include receivables resulting from contracts with customers. 
The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet.
 
Contract Assets
(Dollars in millions)
 
Balance at December 31, 2018
$
9

Contract additions
9

Reclassified to receivables
(11
)
Balance at September 30, 2019
$
7

The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.
 
Contract Liabilities
(Dollars in millions)
 
Balance at December 31, 20181
$
147

Contract additions
78

Terminated contracts
(6
)
Revenue recognized
(61
)
Balance at September 30, 2019
$
158


1
The Balance at December 31, 2018 differs from the amount reported in Note 2 — Revenue Recognition of the 2018 Form 10-K, as the previously reported amount included certain lease-related balances that did not result from contracts with customers.
Transaction price allocated to the remaining performance obligations
The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when wireless services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of September 30, 2019, and may vary from actual results. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. 
 
Service Revenues
(Dollars in millions)
 
Remainder of 2019
$
119

2020
111

Thereafter
237

Total
$
467


U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., certain roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period. 
Contract Cost Assets
U.S. Cellular expects that incremental commission fees paid as a result of obtaining contracts are recoverable and therefore U.S. Cellular capitalizes these costs. As a practical expedient, costs with an amortization period of one year or less are not capitalized. The contract cost asset balance related to commission fees was $130 million at September 30, 2019, and $139 million at December 31, 2018, and was recorded in Other assets and deferred charges in the Consolidated Balance Sheet. Capitalized commission fees are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term which ranges from fifteen months to thirty months. Amortization of contract cost assets was $27 million and $82 million for the three and nine months ended September 30, 2019, respectively, and $27 million and $81 million for the three and nine months ended September 30, 2018, respectively, and was included in Selling, general and administrative expenses.
v3.19.3
Fair Value Measurements
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Note 3 Fair Value Measurements
As of September 30, 2019 and December 31, 2018, U.S. Cellular did not have any material financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP.
The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets.
U.S. Cellular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.
 
 
 
September 30, 2019
 
December 31, 2018
 
Level within the Fair Value Hierarchy
 
Book Value
 
Fair Value
 
Book Value
 
Fair Value
(Dollars in millions)
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
1
 
$
570

 
$
570

 
$
580

 
$
580

Short-term investments
1
 

 

 
17

 
17

Long-term debt
 
 
 
 
 
 
 
 
 
Retail
2
 
917

 
953

 
917

 
850

Institutional
2
 
534

 
583

 
534

 
531

Other
2
 
172

 
172

 
180

 
180


The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes lease obligations, other installment arrangements, the current portion of Long-term debt and debt financing costs. The fair value of “Retail” Long-term debt was estimated using market prices for the 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes and 6.95% Senior Notes. U.S. Cellular’s “Institutional” debt consists of the 6.7% Senior Notes which are traded over the counter. U.S. Cellular’s “Other” debt consists of a senior term loan credit agreement. U.S. Cellular estimated the fair value of its Institutional and Other debt through a discounted cash flow analysis using the interest rates or estimated yield to maturity for each borrowing, which ranged from 3.80% to 5.96% and 5.03% to 6.97% at September 30, 2019 and December 31, 2018, respectively.
v3.19.3
Equipment Installment Plans
9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Equipment Installment Plans
Note 4 Equipment Installment Plans
U.S. Cellular sells devices to customers under equipment installment plans over a specified time period. For certain equipment installment plans, after a specified period of time or amount of payments, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract. U.S. Cellular values this trade-in right as a guarantee liability. The guarantee liability is initially measured at fair value and is determined based on assumptions including the probability and timing of the customer upgrading to a new device and the fair value of the device being traded-in at the time of trade-in. When a customer exercises the trade-in option, both the outstanding receivable and guarantee liability balances related to the respective device are reduced to zero, and the value of the used device that is received in the transaction is recognized as inventory. If the customer does not exercise the trade-in option at the time of eligibility, U.S. Cellular begins amortizing the liability and records this amortization as additional equipment revenue. As of September 30, 2019 and December 31, 2018, the guarantee liability related to these plans was $9 million and $11 million, respectively, and is reflected in Customer deposits and deferred revenues in the Consolidated Balance Sheet.
The following table summarizes equipment installment plan receivables as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Equipment installment plan receivables, gross
$
975

 
$
974

Allowance for credit losses
(82
)
 
(77
)
Equipment installment plan receivables, net
$
893

 
$
897

 
 
 
 
Net balance presented in the Consolidated Balance Sheet as:
 
 
 
Accounts receivable — Customers and agents (Current portion)
$
574

 
$
560

Other assets and deferred charges (Non-current portion)
319

 
337

Equipment installment plan receivables, net
$
893

 
$
897


U.S. Cellular uses various inputs, including internal data, information from credit bureaus and other sources, to evaluate the credit profiles of its customers. From this evaluation, a credit class is assigned to the customer that determines the number of eligible lines, the amount of credit available, and the down payment requirement, if any. Customers assigned to credit classes requiring no down payment represent a lower risk category, whereas those assigned to credit classes requiring a down payment represent a higher risk category. The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:
 
September 30, 2019
 
December 31, 2018
 
Lower Risk
 
Higher Risk
 
Total
 
Lower Risk
 
Higher Risk
 
Total
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
Unbilled
$
898

 
$
9

 
$
907

 
$
904

 
$
17

 
$
921

Billed — current
44

 
1

 
45

 
35

 
1

 
36

Billed — past due
21

 
2

 
23

 
15

 
2

 
17

Equipment installment plan receivables, gross
$
963

 
$
12

 
$
975

 
$
954

 
$
20

 
$
974


Activity for the nine months ended September 30, 2019 and 2018, in the allowance for credit losses for equipment installment plan receivables was as follows:
 
September 30, 2019
 
September 30, 2018
(Dollars in millions)
 
 
 
Allowance for credit losses, beginning of period
$
77

 
$
65

Bad debts expense
60

 
49

Write-offs, net of recoveries
(55
)
 
(41
)
Allowance for credit losses, end of period
$
82

 
$
73


v3.19.3
Earnings Per Share
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Earnings Per Share
Note 5 Earnings Per Share
Basic earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of Common Shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon the exercise of outstanding stock options and the vesting of performance and restricted stock units.
The amounts used in computing earnings per common share and the effects of potentially dilutive securities on the weighted average number of Common Shares were as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Dollars and shares in millions, except per share amounts)
 
 
 
 
 
 
 
Net income attributable to U.S. Cellular shareholders
$
23

 
$
36

 
$
109

 
$
129

 
 
 
 
 
 
 
 
Weighted average number of shares used in basic earnings per share
86

 
86

 
87

 
85

Effects of dilutive securities
2

 
1

 
1

 
1

Weighted average number of shares used in diluted earnings per share
88

 
87

 
88

 
86

 
 
 
 
 
 
 
 
Basic earnings per share attributable to U.S. Cellular shareholders
$
0.27

 
$
0.42

 
$
1.26

 
$
1.51

 
 
 
 
 
 
 
 
Diluted earnings per share attributable to U.S. Cellular shareholders
$
0.27

 
$
0.41

 
$
1.24

 
$
1.49


Certain Common Shares issuable upon the exercise of stock options or vesting of performance and restricted stock units were not included in average diluted shares outstanding for the calculation of Diluted earnings per share attributable to U.S. Cellular shareholders because their effects were antidilutive. The number of such Common Shares excluded was 1 million and less than 1 million for the three and nine months ended September 30, 2019, respectively, and 2 million and 3 million for the three and nine months ended September 30, 2018, respectively.
v3.19.3
Intangible Assets
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Note 6 Intangible Assets
Activity related to Licenses for the nine months ended September 30, 2019, is presented below:
 
Licenses
(Dollars in millions)
 
Balance at December 31, 2018
$
2,186

Acquisitions
259

Transferred to Assets held for sale
(10
)
Exchanges - Licenses received
26

Balance at September 30, 2019
$
2,461


In June 2019, the FCC announced by way of public notice that U.S. Cellular was the provisional winning bidder for 408 wireless spectrum licenses in its 28 GHz auction (Auction 101) and 282 wireless spectrum licenses in its 24 GHz auction (Auction 102) for an aggregate purchase price of $256 million. U.S. Cellular paid substantially all of the $256 million in the first half of 2019. The wireless spectrum licenses from Auction 101 were granted by the FCC on October 2, 2019, and the wireless spectrum licenses from Auction 102 are expected to be granted by the FCC during the fourth quarter of 2019.
v3.19.3
Investments in Unconsolidated Entities
9 Months Ended
Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Entities
Note 7 Investments in Unconsolidated Entities
Investments in unconsolidated entities consist of amounts invested in entities in which U.S. Cellular holds a noncontrolling interest. 
U.S. Cellular’s Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Equity method investments
$
464

 
$
434

Measurement alternative method investments
7

 
7

Total investments in unconsolidated entities
$
471

 
$
441


The following table, which is based in part on information provided by third parties, summarizes the combined results of operations of U.S. Cellular’s equity method investments.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Dollars in millions)
 
 
 
 
 
 
 
Revenues
$
1,714

 
$
1,693

 
$
5,058

 
$
5,005

Operating expenses
1,241

 
1,229

 
3,644

 
3,635

Operating income
473

 
464

 
1,414

 
1,370

Other income (expense), net
(1
)
 
(2
)
 
(3
)
 
(2
)
Net income
$
472

 
$
462

 
$
1,411

 
$
1,368


v3.19.3
Leases
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Leases
Note 8 Leases
Change in Accounting Policy
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases and has since amended the standard with Accounting Standards Update 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842, Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases, Accounting Standards Update 2018-11, Leases: Targeted Improvements, and Accounting Standards Update 2018-20, Leases: Narrow-Scope Improvements for Lessors, collectively referred to as ASC 842. This standard replaces the previous lease accounting standard under ASC 840 - Leases and requires lessees to record a right-of-use (ROU) asset and lease liability for the majority of leases. U.S. Cellular adopted the provisions of ASC 842 on January 1, 2019, using a modified retrospective method. Under this method, U.S. Cellular elected to apply the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, if any, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 842 had no material impact on retained earnings.
U.S. Cellular elected transitional practical expedients for existing leases which eliminated the requirements to reassess existing lease classification, initial direct costs, and whether contracts contain leases. U.S. Cellular also elected the practical expedient related to land easements that allows it to carry forward the accounting treatment for pre-existing land easement agreements.
The cumulative effect of the adoption of ASC 842 on U.S. Cellular’s Consolidated Balance Sheet as of January 1, 2019 is presented below.
 
December 31, 2018
ASC 842 Adjustment
January 1, 2019
(Dollars in millions)
 
 
 
Prepaid expenses
$
63

$
(13
)
$
50

Operating lease right-of-use assets

899

899

Other assets and deferred charges
579

(12
)
567

Short-term operating lease liabilities

101

101

Other current liabilities
94

(8
)
86

Long-term operating lease liabilities

878

878

Other deferred liabilities and credits
389

(97
)
292


In connection with the adoption of ASC 842, U.S. Cellular recorded ROU assets and lease liabilities for its operating leases in its Consolidated Balance Sheet as of January 1, 2019. The amounts for ROU assets and lease liabilities initially were calculated as the discounted value of future lease payments. The difference between the ROU assets and the corresponding lease liabilities at January 1, 2019 as shown in the table above resulted from adjustments to ROU assets to account for various lease prepayments and straight-line expense recognition deferral balances which existed as of December 31, 2018. Finance leases are included in Property, plant and equipment and Long-term debt, net consistent with the presentation under prior accounting standards.
Lessee Agreements
A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of U.S. Cellular’s leases are classified as operating leases, although it does have a small number of finance leases. U.S. Cellular’s most significant leases are for land and tower spaces, network facilities, retail spaces, and offices.
U.S. Cellular has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, U.S. Cellular uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on U.S. Cellular's unsecured rates, adjusted to approximate the rates at which U.S. Cellular would be required to borrow on a collateralized basis over a term similar to the recognized lease term. U.S. Cellular applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term. The cost of nonlease components in U.S. Cellular’s lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price.
Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. U.S. Cellular’s variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities.
Lease term recognition determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when U.S. Cellular is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless U.S. Cellular is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, U.S. Cellular has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes.
The following table shows the components of lease cost included in the Consolidated Statement of Operations:
 
Three Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2019
(Dollars in millions)
 
 
 
Operating lease cost
$
42

 
$
121

Financing lease cost:
 
 
 
Amortization of ROU assets

 
1

Variable lease cost
2

 
6

Total lease cost
$
44

 
$
128



The following table shows supplemental cash flow information related to lease activities:
 
Nine Months Ended
September 30, 2019
(Dollars in millions)
 
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
116

ROU assets obtained in exchange for lease obligations:
 
Operating leases
$
90


The following table shows the classification of U.S. Cellular’s operating and finance leases in its Consolidated Balance Sheet:
 
September 30, 2019
(Dollars in millions)
 
Operating Leases
 

Operating lease right-of-use assets
$
897

 
 
Short-term operating lease liabilities
$
104

Long-term operating lease liabilities
864

Total operating lease liabilities
$
968

 
 
Finance Leases
 
Property, plant and equipment
$
7

Less: Accumulated depreciation and amortization
4

Property, plant and equipment, net
$
3

Current portion of long-term debt 
$
1

Long-term debt, net
3

Total finance lease liabilities
$
4


The table below shows a weighted-average analysis for lease term and discount rate for all leases:
 
September 30, 2019
Weighted Average Remaining Lease Term
 
Operating leases
13 years

Finance leases
25 years

 
 
Weighted Average Discount Rate
 
Operating leases
4.5
%
Finance leases
7.0
%

The maturities of lease liabilities are as follows:
 
Operating Leases
 
Finance Leases
(Dollars in millions)
 
 
 
Remainder of 2019
$
27

 
$

2020
154

 
1

2021
139

 

2022
123

 

2023
108

 
1

Thereafter
788

 
11

Total lease payments1
$
1,339

 
$
13

Less: Imputed interest
371

 
9

Present value of lease liabilities
$
968

 
$
4

1 
Lease payments exclude $11 million of legally binding lease payments for leases signed but not yet commenced.
Lessor Agreements
U.S. Cellular's most significant lessor leases are for tower space. All of U.S. Cellular’s lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. U.S. Cellular’s lessor agreements with lease and nonlease components are generally accounted for separately.
Lease term recognition determines the periods to which revenue is allocated over the term of the lease. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when U.S. Cellular is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise.
Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. U.S. Cellular’s variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income.
The following table shows the components of lease income which are included in service revenues in the Consolidated Statement of Operations:
 
Three Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2019
(Dollars in millions)
 
 
 
Operating lease income1
$
23

 
$
55


1 
During the third quarter of 2019, U.S. Cellular recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the three and nine months ended September 30, 2019. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.
The maturities of expected lease payments to be received are as follows:
 
Operating Leases
(Dollars in millions)
 
Remainder of 2019
$
11

2020
60

2021
48

2022
36

2023
23

Thereafter
12

Total future lease maturities
$
190


Disclosures under ASC 840
As of December 31, 2018, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows:
 
Operating Leases Future Minimum Rental Payments
 
Operating Leases Future Minimum Rental Receipts
(Dollars in millions)
 
 
 
2019
$
154

 
$
58

2020
143

 
47

2021
128

 
34

2022
112

 
22

2023
97

 
10

Thereafter
769

 
3

Total
$
1,403

 
$
174


v3.19.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2019
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
Note 9 Commitments and Contingencies
Purchase Obligations
On September 27, 2019, U.S. Cellular executed a new Master Service Agreement, Master Statement of Work for Managed Services and certain other documents with Amdocs Tethys Limited, effective October 1, 2019, to continue using the Billing and Operational Support System (B/OSS) and certain support functions offered by Amdocs Tethys Limited. The committed, non-cancellable amount to be paid to Amdocs Tethys Limited with respect to the new agreements is $241 million over five years.
v3.19.3
Variable Interest Entities
9 Months Ended
Sep. 30, 2019
Variable Interest Entities [Abstract]  
Variable Interest Entities
Note 10 Variable Interest Entities
Consolidated VIEs
U.S. Cellular consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2018.
During 2017, U.S. Cellular formed USCC EIP LLC (Seller/Sub-Servicer), USCC Receivables Funding LLC (Transferor) and the USCC Master Note Trust (Trust), collectively the special purpose entities (SPEs), to facilitate a securitized borrowing using its equipment installment plan receivables. Under a Receivables Sale Agreement, U.S. Cellular wholly-owned, majority-owned and unconsolidated entities, collectively referred to as “affiliated entities”, transfer device equipment installment plan contracts to the Seller/Sub-Servicer. The Seller/Sub-Servicer aggregates device equipment installment plan contracts, and performs servicing, collection and all other administrative activities related to accounting for the equipment installment plan contracts. The Seller/Sub-Servicer sells the eligible equipment installment plan receivables to the Transferor, a bankruptcy remote entity, which subsequently sells the receivables to the Trust. The Trust, which is bankruptcy remote and isolated from the creditors of U.S. Cellular, will be responsible for issuing asset-backed variable funding notes (Notes), which are collateralized by the equipment installment plan receivables owned by the Trust. Given that U.S. Cellular has the power to direct the activities of these SPEs, and that these SPEs lack sufficient equity to finance their activities, U.S. Cellular is deemed to have a controlling financial interest in the SPEs and, therefore, consolidates them. All transactions with third parties (e.g., issuance of the asset-backed variable funding notes) will be accounted for as a secured borrowing due to the pledging of equipment installment plan contracts as collateral, significant continuing involvement in the transferred assets, subordinated interests of the cash flows, and continued evidence of control of the receivables. 
The following VIEs were formed to participate in FCC auctions of wireless spectrum licenses and to fund, establish, and provide wireless service with respect to any FCC wireless spectrum licenses won in the auctions:
Advantage Spectrum, L.P. (Advantage Spectrum) and Sunshine Spectrum, Inc., the general partner of Advantage Spectrum; and
King Street Wireless, L.P. (King Street Wireless) and King Street Wireless, Inc., the general partner of King Street Wireless.
 
These particular VIEs are collectively referred to as designated entities. The power to direct the activities that most significantly impact the economic performance of these VIEs is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships. The general partner of each partnership needs the consent of the limited partner, an indirect U.S. Cellular subsidiary, to sell or lease certain wireless spectrum licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of these VIEs is shared, U.S. Cellular has the most significant level of exposure to the variability associated with the economic performance of the VIEs, indicating that U.S. Cellular is the primary beneficiary of the VIEs. Therefore, in accordance with GAAP, these VIEs are consolidated.
U.S. Cellular also consolidates other VIEs that are limited partnerships that provide wireless service. A limited partnership is a variable interest entity unless the limited partners hold substantive participating rights or kick-out rights over the general partner. For certain limited partnerships, U.S. Cellular is the general partner and manages the operations. In these partnerships, the limited partners do not have substantive kick-out or participating rights and, further, such limited partners do not have the authority to remove the general partner. Therefore, these limited partnerships are also recognized as VIEs and are consolidated under the variable interest model.
The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Assets
 
 
 
Cash and cash equivalents
$
29

 
$
9

Short-term investments

 
17

Accounts receivable
625

 
611

Inventory, net
4

 
5

Other current assets
6

 
6

Assets held for sale

 
4

Licenses
649

 
652

Property, plant and equipment, net
95

 
94

Operating lease right-of-use assets
42

 

Other assets and deferred charges
329

 
349

Total assets
$
1,779

 
$
1,747

 
 
 
 
Liabilities
 
 
 
Current liabilities
$
34

 
$
34

Liabilities held for sale

 
1

Long-term operating lease liabilities
38

 

Other deferred liabilities and credits
13

 
16

Total liabilities
$
85

 
$
51


Unconsolidated VIEs
U.S. Cellular manages the operations of and holds a variable interest in certain other limited partnerships, but is not the primary beneficiary of these entities and, therefore, does not consolidate them under the variable interest model.
U.S. Cellular’s total investment in these unconsolidated entities was $5 million and $4 million at September 30, 2019 and December 31, 2018, respectively, and is included in Investments in unconsolidated entities in U.S. Cellular’s Consolidated Balance Sheet. The maximum exposure from unconsolidated VIEs is limited to the investment held by U.S. Cellular in those entities. 
Other Related Matters
U.S. Cellular made contributions, loans and/or advances to its VIEs totaling $229 million and $92 million, during the nine months ended September 30, 2019 and 2018, respectively; of which $199 million in 2019 and $66 million in 2018, are related to USCC EIP LLC as discussed above. U.S. Cellular may agree to make additional capital contributions and/or advances to these or other VIEs and/or to their general partners to provide additional funding for operations or the development of wireless spectrum licenses granted in various auctions. U.S. Cellular may finance such amounts with a combination of cash on hand, borrowings under its revolving credit agreement and/or other long-term debt. There is no assurance that U.S. Cellular will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support.
The limited partnership agreements of Advantage Spectrum and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner’s put options related to its interests in King Street Wireless will become exercisable in the fourth quarter of 2019. The general partner’s put options related to its interest in Advantage Spectrum will become exercisable in 2021 and 2022. The greater of the carrying value of the general partner's investment or the value of the put option, net of any borrowings due to U.S. Cellular is recorded as Noncontrolling interests with redemption features in U.S. Cellular’s Consolidated Balance Sheet. Also in accordance with GAAP, minority share of income or changes in the redemption value of the put options, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in U.S. Cellular’s Consolidated Statement of Operations.
During the first quarter of 2018, U.S. Cellular recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $8 million and decreasing Net income attributable to U.S. Cellular shareholders by $8 million for the nine months ended September 30, 2018. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.
v3.19.3
Basis of Presentation (Policies)
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Principles of Consolidation
The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in which it has a controlling financial interest, general partnerships in which U.S. Cellular has a majority partnership interest and certain entities in which U.S. Cellular has a variable interest that require consolidation under GAAP. All material intercompany accounts and transactions have been eliminated.
Basis of Accounting
The unaudited consolidated financial statements included herein have been prepared by U.S. Cellular pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, U.S. Cellular believes that the disclosures included herein are adequate to make the information presented not misleading. Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in U.S. Cellular’s Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2018.
The accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items, unless otherwise disclosed) necessary for the fair statement of U.S. Cellular’s financial position as of September 30, 2019 and December 31, 2018, its results of operations and changes in equity for the three and nine months ended September 30, 2019 and 2018, and its cash flows for the nine months ended September 30, 2019 and 2018. The Consolidated Statement of Comprehensive Income was not included because comprehensive income for the three and nine months ended September 30, 2019 and 2018, equaled net income. These results are not necessarily indicative of the results to be expected for the full year. U.S. Cellular has not changed its significant accounting and reporting policies from those disclosed in its Form 10-K for the year ended December 31, 2018, except as disclosed in Note 8Leases.
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. U.S. Cellular is required to adopt ASU 2016-13 on January 1, 2020, using the modified retrospective approach. Early adoption is permitted; however, U.S. Cellular does not intend to adopt early. The adoption of ASU 2016-13 is not expected to have a significant impact on U.S. Cellular's financial position or results of operations.
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases and has since amended the standard with Accounting Standards Update 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842, Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases, Accounting Standards Update 2018-11, Leases: Targeted Improvements, and Accounting Standards Update 2018-20, Leases: Narrow-Scope Improvements for Lessors, collectively referred to as ASC 842. This standard replaces the previous lease accounting standard under ASC 840 - Leases and requires lessees to record a right-of-use (ROU) asset and lease liability for the majority of leases. U.S. Cellular adopted the provisions of ASC 842 on January 1, 2019, using a modified retrospective method. Under this method, U.S. Cellular elected to apply the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, if any, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 842 had no material impact on retained earnings.
Revenue From Contract With Customer As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. 
U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., certain roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period. 
As a practical expedient, costs with an amortization period of one year or less are not capitalized.
Lessee Agreements
A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of U.S. Cellular’s leases are classified as operating leases, although it does have a small number of finance leases. U.S. Cellular’s most significant leases are for land and tower spaces, network facilities, retail spaces, and offices.
U.S. Cellular has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, U.S. Cellular uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on U.S. Cellular's unsecured rates, adjusted to approximate the rates at which U.S. Cellular would be required to borrow on a collateralized basis over a term similar to the recognized lease term. U.S. Cellular applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term. The cost of nonlease components in U.S. Cellular’s lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price.
Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. U.S. Cellular’s variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities.
Lease term recognition determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when U.S. Cellular is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless U.S. Cellular is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, U.S. Cellular has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes.
Lessor Agreements
U.S. Cellular's most significant lessor leases are for tower space. All of U.S. Cellular’s lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. U.S. Cellular’s lessor agreements with lease and nonlease components are generally accounted for separately.
Lease term recognition determines the periods to which revenue is allocated over the term of the lease. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when U.S. Cellular is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise.
Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. U.S. Cellular’s variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income.
Variable Interest Entities
U.S. Cellular consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2018.
v3.19.3
Basis of Presentation (Tables)
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Reconciliation of cash, cash equivalents and restricted cash The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Cash and cash equivalents
$
570

 
$
580

Restricted cash included in Other current assets
5

 
3

Cash, cash equivalents and restricted cash in the statement of cash flows
$
575

 
$
583


v3.19.3
Revenue Recognition (Tables)
9 Months Ended
Sep. 30, 2019
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time.  
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Dollars in millions)
 
 
 
 
 
 
 
Revenues from contracts with customers:
 
 
 
 
 
 
 
Retail service
$
663

 
$
659

 
$
1,984

 
$
1,960

Inbound roaming
54

 
50

 
132

 
116

Other service
34

 
34

 
101

 
99

Service revenues from contracts with customers
751

 
743

 
2,217

 
2,175

Equipment sales
257

 
242

 
698

 
692

Total revenues from contracts with customers1
$
1,008

 
$
985

 
$
2,915

 
$
2,867

1  
Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.
Contract with Customer, Assets and Liabilities
The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Accounts receivable
 
 
 
Customer and agents
$
899

 
$
908

Roaming
34

 
20

Other
56

 
32

Total1
$
989

 
$
960

1
Accounts receivable line items presented in this table will not agree to amounts presented in the Consolidated Balance Sheet as the amounts in this table only include receivables resulting from contracts with customers. 
The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet.
 
Contract Assets
(Dollars in millions)
 
Balance at December 31, 2018
$
9

Contract additions
9

Reclassified to receivables
(11
)
Balance at September 30, 2019
$
7

The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.
 
Contract Liabilities
(Dollars in millions)
 
Balance at December 31, 20181
$
147

Contract additions
78

Terminated contracts
(6
)
Revenue recognized
(61
)
Balance at September 30, 2019
$
158


1
The Balance at December 31, 2018 differs from the amount reported in Note 2 — Revenue Recognition of the 2018 Form 10-K, as the previously reported amount included certain lease-related balances that did not result from contracts with customers.
Remaining Performance Obligations
The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when wireless services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of September 30, 2019, and may vary from actual results. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. 
 
Service Revenues
(Dollars in millions)
 
Remainder of 2019
$
119

2020
111

Thereafter
237

Total
$
467


v3.19.3
Fair Value Measurements (Tables)
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Fair value measurements
U.S. Cellular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.
 
 
 
September 30, 2019
 
December 31, 2018
 
Level within the Fair Value Hierarchy
 
Book Value
 
Fair Value
 
Book Value
 
Fair Value
(Dollars in millions)
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
1
 
$
570

 
$
570

 
$
580

 
$
580

Short-term investments
1
 

 

 
17

 
17

Long-term debt
 
 
 
 
 
 
 
 
 
Retail
2
 
917

 
953

 
917

 
850

Institutional
2
 
534

 
583

 
534

 
531

Other
2
 
172

 
172

 
180

 
180


v3.19.3
Equipment Installment Plans (Tables)
9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Equipment installment plan receivables
The following table summarizes equipment installment plan receivables as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Equipment installment plan receivables, gross
$
975

 
$
974

Allowance for credit losses
(82
)
 
(77
)
Equipment installment plan receivables, net
$
893

 
$
897

 
 
 
 
Net balance presented in the Consolidated Balance Sheet as:
 
 
 
Accounts receivable — Customers and agents (Current portion)
$
574

 
$
560

Other assets and deferred charges (Non-current portion)
319

 
337

Equipment installment plan receivables, net
$
893

 
$
897


Equipment installment plan receivables credit categories The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:
 
September 30, 2019
 
December 31, 2018
 
Lower Risk
 
Higher Risk
 
Total
 
Lower Risk
 
Higher Risk
 
Total
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
Unbilled
$
898

 
$
9

 
$
907

 
$
904

 
$
17

 
$
921

Billed — current
44

 
1

 
45

 
35

 
1

 
36

Billed — past due
21

 
2

 
23

 
15

 
2

 
17

Equipment installment plan receivables, gross
$
963

 
$
12

 
$
975

 
$
954

 
$
20

 
$
974


Equipment installment plans allowance for credit losses
Activity for the nine months ended September 30, 2019 and 2018, in the allowance for credit losses for equipment installment plan receivables was as follows:
 
September 30, 2019
 
September 30, 2018
(Dollars in millions)
 
 
 
Allowance for credit losses, beginning of period
$
77

 
$
65

Bad debts expense
60

 
49

Write-offs, net of recoveries
(55
)
 
(41
)
Allowance for credit losses, end of period
$
82

 
$
73


v3.19.3
Earnings Per Share (Tables)
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Earnings per share
The amounts used in computing earnings per common share and the effects of potentially dilutive securities on the weighted average number of Common Shares were as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Dollars and shares in millions, except per share amounts)
 
 
 
 
 
 
 
Net income attributable to U.S. Cellular shareholders
$
23

 
$
36

 
$
109

 
$
129

 
 
 
 
 
 
 
 
Weighted average number of shares used in basic earnings per share
86

 
86

 
87

 
85

Effects of dilutive securities
2

 
1

 
1

 
1

Weighted average number of shares used in diluted earnings per share
88

 
87

 
88

 
86

 
 
 
 
 
 
 
 
Basic earnings per share attributable to U.S. Cellular shareholders
$
0.27

 
$
0.42

 
$
1.26

 
$
1.51

 
 
 
 
 
 
 
 
Diluted earnings per share attributable to U.S. Cellular shareholders
$
0.27

 
$
0.41

 
$
1.24

 
$
1.49


v3.19.3
Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Licenses
Activity related to Licenses for the nine months ended September 30, 2019, is presented below:
 
Licenses
(Dollars in millions)
 
Balance at December 31, 2018
$
2,186

Acquisitions
259

Transferred to Assets held for sale
(10
)
Exchanges - Licenses received
26

Balance at September 30, 2019
$
2,461


v3.19.3
Investments in Unconsolidated Entities (Tables)
9 Months Ended
Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Equity and measurement alternative method investments
U.S. Cellular’s Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Equity method investments
$
464

 
$
434

Measurement alternative method investments
7

 
7

Total investments in unconsolidated entities
$
471

 
$
441


Equity method investments, summarized results of operations
The following table, which is based in part on information provided by third parties, summarizes the combined results of operations of U.S. Cellular’s equity method investments.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Dollars in millions)
 
 
 
 
 
 
 
Revenues
$
1,714

 
$
1,693

 
$
5,058

 
$
5,005

Operating expenses
1,241

 
1,229

 
3,644

 
3,635

Operating income
473

 
464

 
1,414

 
1,370

Other income (expense), net
(1
)
 
(2
)
 
(3
)
 
(2
)
Net income
$
472

 
$
462

 
$
1,411

 
$
1,368


v3.19.3
Leases (Tables)
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Schedule of new accounting pronouncements and changes in accounting principles
The cumulative effect of the adoption of ASC 842 on U.S. Cellular’s Consolidated Balance Sheet as of January 1, 2019 is presented below.
 
December 31, 2018
ASC 842 Adjustment
January 1, 2019
(Dollars in millions)
 
 
 
Prepaid expenses
$
63

$
(13
)
$
50

Operating lease right-of-use assets

899

899

Other assets and deferred charges
579

(12
)
567

Short-term operating lease liabilities

101

101

Other current liabilities
94

(8
)
86

Long-term operating lease liabilities

878

878

Other deferred liabilities and credits
389

(97
)
292


Components of lease expense
The following table shows the components of lease cost included in the Consolidated Statement of Operations:
 
Three Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2019
(Dollars in millions)
 
 
 
Operating lease cost
$
42

 
$
121

Financing lease cost:
 
 
 
Amortization of ROU assets

 
1

Variable lease cost
2

 
6

Total lease cost
$
44

 
$
128


Supplemental cash flow information related to leases
The following table shows supplemental cash flow information related to lease activities:
 
Nine Months Ended
September 30, 2019
(Dollars in millions)
 
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
116

ROU assets obtained in exchange for lease obligations:
 
Operating leases
$
90


Supplemental balance sheet information related to leases
The following table shows the classification of U.S. Cellular’s operating and finance leases in its Consolidated Balance Sheet:
 
September 30, 2019
(Dollars in millions)
 
Operating Leases
 

Operating lease right-of-use assets
$
897

 
 
Short-term operating lease liabilities
$
104

Long-term operating lease liabilities
864

Total operating lease liabilities
$
968

 
 
Finance Leases
 
Property, plant and equipment
$
7

Less: Accumulated depreciation and amortization
4

Property, plant and equipment, net
$
3

Current portion of long-term debt 
$
1

Long-term debt, net
3

Total finance lease liabilities
$
4


Schedule of weighted average remaining lease term and weighted average discount rate related to leases
The table below shows a weighted-average analysis for lease term and discount rate for all leases:
 
September 30, 2019
Weighted Average Remaining Lease Term
 
Operating leases
13 years

Finance leases
25 years

 
 
Weighted Average Discount Rate
 
Operating leases
4.5
%
Finance leases
7.0
%

Maturities of lease liabilities
The maturities of lease liabilities are as follows:
 
Operating Leases
 
Finance Leases
(Dollars in millions)
 
 
 
Remainder of 2019
$
27

 
$

2020
154

 
1

2021
139

 

2022
123

 

2023
108

 
1

Thereafter
788

 
11

Total lease payments1
$
1,339

 
$
13

Less: Imputed interest
371

 
9

Present value of lease liabilities
$
968

 
$
4

1 
Lease payments exclude $11 million of legally binding lease payments for leases signed but not yet commenced.
Lease income
The following table shows the components of lease income which are included in service revenues in the Consolidated Statement of Operations:
 
Three Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2019
(Dollars in millions)
 
 
 
Operating lease income1
$
23

 
$
55


1 
During the third quarter of 2019, U.S. Cellular recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the three and nine months ended September 30, 2019. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.
Maturities of expected lease revenues
The maturities of expected lease payments to be received are as follows:
 
Operating Leases
(Dollars in millions)
 
Remainder of 2019
$
11

2020
60

2021
48

2022
36

2023
23

Thereafter
12

Total future lease maturities
$
190


Lease commitments
As of December 31, 2018, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows:
 
Operating Leases Future Minimum Rental Payments
 
Operating Leases Future Minimum Rental Receipts
(Dollars in millions)
 
 
 
2019
$
154

 
$
58

2020
143

 
47

2021
128

 
34

2022
112

 
22

2023
97

 
10

Thereafter
769

 
3

Total
$
1,403

 
$
174


v3.19.3
Variable Interest Entities (Tables)
9 Months Ended
Sep. 30, 2019
Variable Interest Entities [Abstract]  
Consolidated VIE assets and liabilities
The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet.
 
September 30, 2019
 
December 31, 2018
(Dollars in millions)
 
 
 
Assets
 
 
 
Cash and cash equivalents
$
29

 
$
9

Short-term investments

 
17

Accounts receivable
625

 
611

Inventory, net
4

 
5

Other current assets
6

 
6

Assets held for sale

 
4

Licenses
649

 
652

Property, plant and equipment, net
95

 
94

Operating lease right-of-use assets
42

 

Other assets and deferred charges
329

 
349

Total assets
$
1,779

 
$
1,747

 
 
 
 
Liabilities
 
 
 
Current liabilities
$
34

 
$
34

Liabilities held for sale

 
1

Long-term operating lease liabilities
38

 

Other deferred liabilities and credits
13

 
16

Total liabilities
$
85

 
$
51


v3.19.3
Basis of Presentation - Narrative (Details)
Sep. 30, 2019
TDS | U.S. Cellular  
Basis of Presentation [Line Items]  
Ownership percentage 82.00%
v3.19.3
Basis of Presentation - Restricted Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Sep. 30, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]        
Cash and cash equivalents $ 570 $ 580    
Restricted cash included in Other current assets 5 3    
Cash, cash equivalents and restricted cash in the statement of cash flows $ 575 $ 583 $ 732 $ 352
v3.19.3
Revenue Recognition - Disaggregation Of Revenue (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Disaggregation of revenue        
Revenue from contracts with customers $ 1,008 $ 985 $ 2,915 $ 2,867
Transferred over time        
Disaggregation of revenue        
Revenue from contracts with customers 751 743 2,217 2,175
Transferred over time | Retail service        
Disaggregation of revenue        
Revenue from contracts with customers 663 659 1,984 1,960
Transferred over time | Inbound roaming        
Disaggregation of revenue        
Revenue from contracts with customers 54 50 132 116
Transferred over time | Other service        
Disaggregation of revenue        
Revenue from contracts with customers 34 34 101 99
Transferred at point in time | Equipment sales        
Disaggregation of revenue        
Revenue from contracts with customers $ 257 $ 242 $ 698 $ 692
v3.19.3
Revenue Recognition - Accounts Receivable (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Accounts receivable    
Customers and agents $ 899 $ 908
Roaming 34 20
Other 60 46
Accounts receivable from contract with customer    
Accounts receivable    
Customers and agents 899 908
Roaming 34 20
Other 56 32
Total $ 989 $ 960
v3.19.3
Revenue Recognition - Contract Assets (Details)
$ in Millions
9 Months Ended
Sep. 30, 2019
USD ($)
Contract Assets  
Balance, beginning of period $ 9
Contract additions 9
Reclassified to receivables (11)
Balance, end of period $ 7
v3.19.3
Revenue Recognition - Contract Liabilities (Details)
$ in Millions
9 Months Ended
Sep. 30, 2019
USD ($)
Contract Liabilities  
Balance, beginning of period $ 147
Contract additions 78
Terminated contracts (6)
Revenue recognized (61)
Balance, end of period $ 158
v3.19.3
Revenue Recognition - Performance Obligations (Details)
$ in Millions
Sep. 30, 2019
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation amount $ 467
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation amount $ 119
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Expected timing of remaining performance obligation, period 3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation amount $ 111
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Expected timing of remaining performance obligation, period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation amount $ 237
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Expected timing of remaining performance obligation, period
v3.19.3
Revenue Recognition - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Capitalized Contract Cost          
Capitalized contract cost related to commission fees $ 130   $ 130   $ 139
Amortization of contract cost assets $ 27 $ 27 $ 82 $ 81  
Minimum          
Capitalized Contract Cost          
Capitalized contract cost, amortization period 15 months   15 months    
Maximum          
Capitalized Contract Cost          
Capitalized contract cost, amortization period 30 months   30 months    
v3.19.3
Fair Value Measurements (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Financial Instruments    
Cash and cash equivalents $ 570 $ 580
Short-term investments $ 0 17
7.25% 2063 Senior Notes    
Financial Instruments    
Interest rate 7.25%  
7.25% 2064 Senior Notes    
Financial Instruments    
Interest rate 7.25%  
6.95% Senior Notes    
Financial Instruments    
Interest rate 6.95%  
6.7% Senior Notes    
Financial Instruments    
Interest rate 6.70%  
Book Value    
Financial Instruments    
Cash and cash equivalents $ 570 580
Short-term investments 0 17
Book Value | Retail    
Financial Instruments    
Long-term debt 917 917
Book Value | Institutional    
Financial Instruments    
Long-term debt 534 534
Book Value | Other    
Financial Instruments    
Long-term debt 172 180
Fair Value | Level 1    
Financial Instruments    
Cash and cash equivalents 570 580
Short-term investments 0 17
Fair Value | Level 2 | Retail    
Financial Instruments    
Long-term debt 953 850
Fair Value | Level 2 | Institutional    
Financial Instruments    
Long-term debt 583 531
Fair Value | Level 2 | Other    
Financial Instruments    
Long-term debt $ 172 $ 180
Interest rate | Institutional and Other | Minimum    
Financial Instruments    
Fair value assumption, interest rate 3.80% 5.03%
Interest rate | Institutional and Other | Maximum    
Financial Instruments    
Fair value assumption, interest rate 5.96% 6.97%
v3.19.3
Equipment Installment Plans - Narrative (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Receivables [Abstract]    
Guarantee liability $ 9 $ 11
v3.19.3
Equipment Installment Plans - EIP Receivables (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Equipment installment plan receivables, gross $ 975 $ 974
Allowance for credit losses (82) (77)
Equipment installment plan receivables, net 893 897
Accounts receivable — Customers and agents (Current portion)    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Equipment installment plan receivables, net 574 560
Other assets and deferred charges (Non-current portion)    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Equipment installment plan receivables, net $ 319 $ 337
v3.19.3
Equipment Installment Plans - Gross Receivables by Credit Category (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables, gross $ 975 $ 974
Unbilled    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables 907 921
Billed    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables 45 36
Equipment installment plan receivables, past due 23 17
Lower Risk    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables, gross 963 954
Lower Risk | Unbilled    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables 898 904
Lower Risk | Billed    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables 44 35
Equipment installment plan receivables, past due 21 15
Higher Risk    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables, gross 12 20
Higher Risk | Unbilled    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables 9 17
Higher Risk | Billed    
Financing Receivable, Credit Quality Indicator [Line Items]    
Equipment installment plan receivables 1 1
Equipment installment plan receivables, past due $ 2 $ 2
v3.19.3
Equipment Installment Plans - Allowance for Credit Losses (Details) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Allowance for credit losses    
Allowance for credit losses, beginning of period $ 77  
Allowance for credit losses, end of period 82  
Equipment Installment Plan Receivable    
Allowance for credit losses    
Allowance for credit losses, beginning of period 77 $ 65
Bad debts expense 60 49
Write-offs, net of recoveries (55) (41)
Allowance for credit losses, end of period $ 82 $ 73
v3.19.3
Earnings Per Share - Reconciliation (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Earnings Per Share [Abstract]        
Net income attributable to U.S. Cellular shareholders $ 23 $ 36 $ 109 $ 129
Weighted average number of shares used in basic earnings per share (in shares) 86 86 87 85
Effects of dilutive securities (in shares) 2 1 1 1
Weighted average number of shares used in diluted earnings per share (in shares) 88 87 88 86
Basic earnings per share attributable to U.S. Cellular shareholders (USD per share) $ 0.27 $ 0.42 $ 1.26 $ 1.51
Diluted earnings per share attributable to U.S. Cellular shareholders (USD per share) $ 0.27 $ 0.41 $ 1.24 $ 1.49
v3.19.3
Earnings Per Share - Narrative (Details) - shares
shares in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities (in shares) 1 2   3
Maximum        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities (in shares)     1  
v3.19.3
Intangible Assets (Details) - Licenses
$ in Millions
9 Months Ended
Sep. 30, 2019
USD ($)
Licenses  
Balance, beginning of period $ 2,186
Acquisitions 259
Transferred to Assets held for sale (10)
Exchanges - Licenses received 26
Balance, end of period $ 2,461
v3.19.3
Intangible Assets - Narrative (Details)
$ in Millions
9 Months Ended
Sep. 30, 2019
USD ($)
license
Licenses  
Total winning bid | $ $ 256
Auction 101  
Licenses  
Licenses won 408
Auction 102  
Licenses  
Licenses won 282
v3.19.3
Investments in Unconsolidated Entities - Schedule of Investments (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Equity Method Investments and Joint Ventures [Abstract]          
Equity method investments $ 464   $ 464   $ 434
Measurement alternative method investments 7   7   7
Total investments in unconsolidated entities 471   471   $ 441
Equity method investments, combined income statements          
Revenues 1,714 $ 1,693 5,058 $ 5,005  
Operating expenses 1,241 1,229 3,644 3,635  
Operating income 473 464 1,414 1,370  
Other income (expense), net (1) (2) (3) (2)  
Net income $ 472 $ 462 $ 1,411 $ 1,368  
v3.19.3
Leases - Narrative (Details)
$ in Millions
Sep. 30, 2019
USD ($)
Minimum | ASC 842 | Retained earnings  
Leases  
Cumulative effect of accounting change $ 0
v3.19.3
Leases - Consolidated Balance Sheet (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Leases - Consolidated Balance Sheet      
Prepaid expenses $ 49 $ 50 $ 63
Operating lease right-of-use assets 897 899 0
Other assets and deferred charges 539 567 579
Short-term operating lease liabilities 104 101 0
Other current liabilities 78 86 94
Long-term operating lease liabilities 864 878 0
Other deferred liabilities and credits $ 312 292 $ 389
ASC 842 Adjustment      
Leases - Consolidated Balance Sheet      
Prepaid expenses   (13)  
Operating lease right-of-use assets   899  
Other assets and deferred charges   (12)  
Short-term operating lease liabilities   101  
Other current liabilities   (8)  
Long-term operating lease liabilities   878  
Other deferred liabilities and credits   $ (97)  
v3.19.3
Leases - Lease Cost (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2019
Lease, Cost [Abstract]    
Operating lease cost $ 42 $ 121
Amortization of ROU assets 0 1
Variable lease cost 2 6
Total lease cost $ 44 $ 128
v3.19.3
Leases - Supplemental Cash Flow Information (Details)
$ in Millions
9 Months Ended
Sep. 30, 2019
USD ($)
Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows from operating leases $ 116
ROU assets obtained in exchange for lease obligations:  
Operating leases $ 90
v3.19.3
Leases - Classification of Operating and Finance Leases (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Operating Leases      
Operating lease right-of-use assets $ 897 $ 899 $ 0
Short-term operating lease liabilities 104 101 0
Long-term operating lease liabilities 864 $ 878 0
Total operating lease liabilities 968    
Finance Leases      
Property, plant and equipment 8,088   7,778
Less: Accumulated depreciation and amortization 5,944   5,576
Property, plant and equipment, net 2,144   2,202
Current portion of long-term debt 19   19
Long-term debt, net 1,592   $ 1,605
Total finance lease liabilities 4    
Operating leases      
Operating Leases      
Operating lease right-of-use assets 897    
Short-term operating lease liabilities 104    
Long-term operating lease liabilities 864    
Total operating lease liabilities 968    
Finance leases      
Finance Leases      
Property, plant and equipment 7    
Less: Accumulated depreciation and amortization 4    
Property, plant and equipment, net 3    
Current portion of long-term debt 1    
Long-term debt, net 3    
Total finance lease liabilities $ 4    
v3.19.3
Leases - Lease Term and Discount Rate (Details)
Sep. 30, 2019
Weighted Average Remaining Lease Term  
Operating leases 13 years
Finance leases 25 years
Weighted Average Discount Rate  
Operating leases 4.50%
Finance leases 7.00%
v3.19.3
Leases - Maturities of Lease Liabilities (Details)
$ in Millions
Sep. 30, 2019
USD ($)
Operating Leases Future Minimum Rental Payments  
Remainder of 2019 $ 27
2020 154
2021 139
2022 123
2023 108
Thereafter 788
Total lease payments 1,339
Less: Imputed interest 371
Present value of lease liabilities 968
Finance Leases  
Remainder of 2019 0
2020 1
2021 0
2022 0
2023 1
Thereafter 11
Total lease payments 13
Less: Imputed interest 9
Present value of lease liabilities 4
Legally binding lease payments for leases signed but not yet commenced $ 11
v3.19.3
Leases - Components of Lease Income (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2019
Leases    
Operating lease income1 $ 23 $ 55
Tower leases out of period adjustment    
Leases    
Immaterial error correction   During the third quarter of 2019, U.S. Cellular recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the three and nine months ended September 30, 2019. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.
Other service revenues | Tower leases out of period adjustment    
Leases    
Out-of-period adjustment $ 5 $ 5
v3.19.3
Leases - Maturities of Expected Lease Revenues (Details)
$ in Millions
Sep. 30, 2019
USD ($)
Leases [Abstract]  
Remainder of 2019 $ 11
2020 60
2021 48
2022 36
2023 23
Thereafter 12
Total future lease maturities $ 190
v3.19.3
Leases - Minimum Lease Obligations (Details)
$ in Millions
Dec. 31, 2018
USD ($)
Operating Leases Future Minimum Rental Payments  
2019 $ 154
2020 143
2021 128
2022 112
2023 97
Thereafter 769
Total 1,403
Operating Leases Future Minimum Rental Receipts  
2019 58
2020 47
2021 34
2022 22
2023 10
Thereafter 3
Total $ 174
v3.19.3
Commitments and Contingencies (Details)
9 Months Ended
Sep. 30, 2019
USD ($)
Amdocs Tethys Limited  
Purchase Commitments  
Purchase commitment $ 241
v3.19.3
Variable Interest Entities - Consolidataed Balance Sheet (Details) - USD ($)
$ in Millions
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Assets      
Cash and cash equivalents $ 570   $ 580
Short-term investments 0   17
Accounts receivable 899   908
Inventory, net 139   142
Other current assets 19   34
Assets held for sale 9   54
Licenses 2,461   2,186
Property, plant and equipment, net 2,144   2,202
Operating lease right-of-use assets 897 $ 899 0
Other assets and deferred charges 539 567 579
Liabilities      
Current liabilities 849   691
Liabilities held for sale 1   1
Long-term operating lease liabilities 864 $ 878 0
Consolidated Variable Interest Entities      
Assets      
Cash and cash equivalents 29   9
Short-term investments 0   17
Accounts receivable 625   611
Inventory, net 4   5
Other current assets 6   6
Assets held for sale 0   4
Licenses 649   652
Property, plant and equipment, net 95   94
Operating lease right-of-use assets 42   0
Other assets and deferred charges 329   349
Total assets 1,779   1,747
Liabilities      
Current liabilities 34   34
Liabilities held for sale 0   1
Long-term operating lease liabilities 38   0
Other deferred liabilities and credits 13   16
Total liabilities $ 85   $ 51
v3.19.3
Variable Interest Entities - Narrative (Details) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Variable Interest Entity [Line Items]      
Investments in unconsolidated entities, maximum exposure $ 5   $ 4
Capital contributions, loans or advances $ 229 $ 92  
King Street Wireless out-of-period adjustment      
Variable Interest Entity [Line Items]      
Immaterial error correction During the first quarter of 2018, U.S. Cellular recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $8 million and decreasing Net income attributable to U.S. Cellular shareholders by $8 million for the nine months ended September 30, 2018. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.    
Net income attributable to noncontrolling interests, net of tax | King Street Wireless out-of-period adjustment      
Variable Interest Entity [Line Items]      
Out-of-period adjustment   8  
Net income attributable to U.S. Cellular shareholders | King Street Wireless out-of-period adjustment      
Variable Interest Entity [Line Items]      
Out-of-period adjustment   (8)  
USCC EIP LLC      
Variable Interest Entity [Line Items]      
Capital contributions, loans or advances $ 199 $ 66