NEW YORK-Like Sam Ginn, its chairman and chief executive officer, AirTouch Communications Inc. is on a roll, aided by those two key components of success-good luck and good timing.
Ginn arrived in New York Feb. 4 from San Francisco to meet “the Street,” just behind a stellar year-end earnings release and in between the onset of major storms pounding both coasts.
In 1997, the carrier’s worldwide customer base in cellular, personal communications services and paging reached 10.7 million on a proportionate basis. By Dec. 31, AirTouch said the ventures in which it is sole or part owner served about 10 percent of all cellular and PCS customers in the world.
“At the beginning of 1997, we said we’d set records for customer growth and operating cash flow for the year. We were right,” Ginn said in AirTouch’s Feb. 3 earnings announcement.
“We added 2.7 million customers while beating our goal of $1.5 billion in operating cash flow by more than $200 million.”
Of that total, 246,000 were new domestic customers of AirTouch Paging, whose subscribers numbered more than 3.1 million at year-end. AirTouch Paging is profitable and cash flow positive. There is a simple and good reason for this performance, Ginn told RCR in an interview Feb. 5.
AirTouch Paging made a concerted effort last year to disrupt a “disturbing trend” by severing its ties with “resellers that were destroying the pricing structure of the industry,” he said.
In the maturing cellular business, AirTouch has cast aside what it considers an outmoded formula that growth in market penetration will overcome declines in average revenue per subscriber. Instead, it seeks to offer more services and accelerate the migration from wireline to wireless service, Ginn said.
This year, as part of that strategy, “we are beginning to position ourselves for data and are looking to build off our wireless platform, like building international networks instead of handing off calls to AT&T,” he said.
In 1998, Ginn said AirTouch also plans continued buildout to improve coverage for its Powerband digital service. Powerband, available now in all AirTouch markets, closed 1997 with 100,000 subscribers.
Another priority is to proceed withPrimeCo Personal Communications L.P.’s PCS network construction. The AirTouch-Bell Atlantic Mobile joint venture ended 1997 with 387,000 subscribers.
“In 1997, PrimeCo PCS met all the objectives of its owners, [including] customers and cash flow. It’s on plan,” Ginn said.
Asked about recently published speculation of a merger between the two industry giants, Ginn said that `never say never’ always is the obligation of a chief executive. However, he stated emphatically, “AirTouch operationally is a highly tuned machine.
“I’ve been in the business a long time, and I’ve never seen an organization performing at this level. Why mess it up?”
On the cellular side of their businesses, AirTouch and Bell Atlantic already have achieved through operating arrangements some significant synergies and savings through scale-being able to buy handsets in bulk and systems integration to enable roaming.
“I see no compelling need for integration of equity,” Ginn said.
Ginn said the pending privatization of Europe’s government-owned wireline carriers isn’t much of an equity participation temptation for AirTouch either.
“We have no abiding interest in getting into wireline. We’ve got the company positioned in the high-growth wireless sector,” Ginn said.
Instead, AirTouch is bidding for new Personal Communications Services-1900 licenses in the Netherlands and Switzerland. With Vodafone Group plc, AirTouch also is bidding jointly for a PCS-1900 license in Egypt. Vodafone is the minority partner with AirTouch in Sweden’s Europolitan digital cellular carrier.
In Asia, AirTouch already is involved in wireless ventures in India, Japan and South Korea. “Even with the current difficulties, we continue to grow customers, although not at the same rate,” Ginn said.
Unlike the troubled banking sector in some Asian countries that now has opened wider to foreign ownership, control of telecommunications still is closely guarded.
“We are hoping, as a policy matter, that governments will lift artificial constraints and let the market decide. We watch deregulation policies very closely and, if we see opportunities, we go in.”
