Equipment Installment Plans

3 Months Ended

Mar. 31, 2023

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.


	March 31, 2023		December 31, 2022
(Dollars in millions)
Equipment installment plan receivables, gross	$	1,184	$	1,211


Allowance for credit losses	(94)		(96)
Equipment installment plan receivables, net	$	1,090	$	1,115

Net balance presented in the Consolidated Balance Sheet as:
Accounts receivable — Customers and agents (Current portion)	$	623	$	646
Other assets and deferred charges (Non-current portion)	467		469
Equipment installment plan receivables, net	$	1,090	$	1,115

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:


	March 31, 2023										December 31, 2022
	Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total		Lowest Risk		Lower Risk		Slight Risk		Higher Risk		Total
(Dollars in millions)
Unbilled	$	997	$	95	$	23	$	6	$	1,121	$	1,016	$	98	$	22	$	5	$	1,141
Billed — current	38		4		1		—		43		41		5		2		—		48
Billed — past due	11		6		2		1		20		13		6		2		1		22
Total	$	1,046	$	105	$	26	$	7	$	1,184	$	1,070	$	109	$	26	$	6	$	1,211

The balance of the equipment installment plan receivables as of March 31, 2023 on a gross basis by year of origination were as follows:


	2020		2021		2022		2023		Total
(Dollars in millions)
Lowest Risk	$	16	$	229	$	639	$	162	$	1,046
Lower Risk	1		17		65		22		105
Slight Risk	—		2		14		10		26
Higher Risk	—		1		4		2		7
Total	$	17	$	249	$	722	$	196	$	1,184

The write-offs, net of recoveries for the three months ended March 31, 2023 on a gross basis by year of origination were as follows:


	2021		2022		2023		Total
(Dollars in millions)
Write-offs, net of recoveries	$	6	$	14	$	—	$	20

Activity for the three months ended March 31, 2023 and 2022, in the allowance for credit losses for equipment installment plan receivables was as follows:


	March 31, 2023		March 31, 2022
(Dollars in millions)
Allowance for credit losses, beginning of period	$	96	$	72
Bad debts expense	18		17
Write-offs, net of recoveries	(20)		(16)
Allowance for credit losses, end of period	$	94	$	73