Even though Powertel Inc. added 21,000 subscribers during the third quarter, the company was stung with a 42-percent increase in churn from the previous quarter.
The carrier, which closed the three-month period ended Sept. 30 with 66,000 total PCS subscribers, said its PCS churn increased from 2.6 percent in the second quarter to 3.7 percent during the third quarter. PCS average monthly churn to date is 3 percent.
“During the quarter, Powertel proactively deactivated a substantial number of non-paying accounts,” said Allen Smith, Powertel’s president and chief executive officer. “The growth of our business had outpaced our ability to aggressively manage our accounts receivable aging. We are well under way with an initiative to evolve our credit and risk management processes and systems and expect churn to stabilize or decline in the fourth quarter.”
Powertel said most of the bad debts have resulted from the Prestige Partner plan it launched about a year ago. The plan entailed customers paying $50 a month for unlimited calling for one year. Most of those plans are now set to expire.
Powertel recorded a net loss of $45.9 million, or $1.71 per share, for the third quarter compared with a net income of $59,600, or 2 cents per share, for the same quarter last year. Revenues and sales totaled $18.5 million for the three-month period, a 103-percent increase compared with $9.1 million from the previous year. PCS service revenues increased to $10.2 million from $8.2 million in the second quarter of this year.
Through the company’s InterCel cellular division, which serves Alabama and Georgia, Powertel added about 600 net cellular subscribers during the quarter, closing the period with 24,895 cellular subscribers. The company’s market penetration reached 1.1 percent on a covered pop basis. At the end of the quarter, Powertel’s PCS network covered about 5.9 million people throughout Alabama, Florida, Georgia, Mississippi and Tennessee. During the quarter, the carrier launched service in Columbus, LaGrange, and West Point, Ga., and Auburn and Opelika, Ala.
Powertel recently rolled out new pricing plans it believes will systematically drive up the value proposition of the company’s service. Powertel also aims to entice customers by offering competitive long-distance rates. The operator’s standard offering is 10 cents per minute for calls placed in Powertel service areas, and 15 cents per minute for calls made outside of the carrier’s footprint.
“It’s compelling for customers to choose wireless phones to place long-distance calls … We have an extensive network to serve as a backbone. Eighty-seven percent of our overall long distance is carried over our own network,” said Smith. “As we move forward, we are looking at limited landline [for] additional services to the home … Flat-rated non-metered service is a good value proposition.”
