Equipment Installment Plans

9 Months Ended

Sep. 30, 2022

Note 4 Equipment Installment Plans

UScellular 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.

The following table summarizes equipment installment plan receivables.


	September 30, 2022		December 31, 2021
(Dollars in millions)
Equipment installment plan receivables, gross	$	1,161	$	1,085


Allowance for credit losses	(87)		(72)
Equipment installment plan receivables, net	$	1,074	$	1,013

Net balance presented in the Consolidated Balance Sheet as:
Accounts receivable — Customers and agents (Current portion)	$	642	$	639
Other assets and deferred charges (Non-current portion)	432		374
Equipment installment plan receivables, net	$	1,074	$	1,013

UScellular 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. These credit classes are grouped into four credit categories: lowest risk, lower risk, slight risk and higher risk. A customer's assigned credit class is reviewed periodically and a change is made, if appropriate. An equipment installment plan billed amount is considered past due if not paid within 30 days. The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:


	September 30, 2022										December 31, 2021
	Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total		Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total
(Dollars in millions)
Unbilled	$	974	$	93	$	23	$	5	$	1,095	$	896	$	94	$	24	$	5	$	1,019
Billed — current	39		5		1		—		45		40		5		1		1		47
Billed — past due	11		6		3		1		21		10		6		2		1		19
Total	$	1,024	$	104	$	27	$	6	$	1,161	$	946	$	105	$	27	$	7	$	1,085

The balance of the equipment installment plan receivables as of September 30, 2022 on a gross basis by year of origination were as follows:


	2019		2020		2021		2022		Total
(Dollars in millions)
Lowest Risk	$	1	$	87	$	380	$	556	$	1,024
Lower Risk	—		6		40		58		104
Slight Risk	—		1		6		20		27
Higher Risk	—		—		2		4		6
Total	$	1	$	94	$	428	$	638	$	1,161

Activity for the nine months ended September 30, 2022 and 2021, in the allowance for credit losses for equipment installment plan receivables was as follows:


	September 30, 2022		September 30, 2021
(Dollars in millions)
Allowance for credit losses, beginning of period	$	72	$	78
Bad debts expense	69		21
Write-offs, net of recoveries	(54)		(29)
Allowance for credit losses, end of period	$	87	$	70