Telephone and Data Systems (TDS) announced third-quarter 2009 earnings per share of 33 cents, which fell behind the Zacks Consensus Estimate of 47 cents and the year-ago quarter EPS of 87 cents. Net income (attributable to TDS) tumbled 65% year over year to $35.6 million as profit dipped at the company's wireless subsidiary U.S. Cellular (USM).

The Chicago-based company reported operating revenue of $1,258.7 million, reflecting a 4% year over year drop as a result of declines across its wireless and wireline businesses.

U.S. Cellular (Wireless)

Net income sank 60% year over year to $35.6 million, due to lower revenue and increased operating expenses. Operating revenue declined 3% over the prior-year quarter to $1,058 million as a result of a 3% year over year decline in service revenues that registered $984.9 million in the quarter. The unit continues to experience lower roaming revenue, offset by healthy data revenue growth (up

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Fitch Ratings has revised the rating outlook for Telephone and Data Systems (TDS) and its wireless subsidiary US Cellular (USM) to Negative from Stable. The international rating agency has affirmed its BBB+ rating for both the entities with respect to issuer default, senior secured debt and revolving credit facility.

This revision in rating outlook reflects TDS’s weak performance in the last quarter across both wireless and wireline segments, which prompted the management to revise the financial guidance for 2009. The company has reported tepid revenue growth in the last quarter, which was accompanied by 21% year over year decline in net profit.

US Cellular was hit by a weak economy and intense competition as it lost 88,000 customers during the second quarter. The company reported decline in ARPU (average revenue per user) as growth in data was offset by the declines in voice and roaming revenue. This declining trend is

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