Competition from personal communications services providers has impacted the bottom line of many cellular carriers, although the overall health of the cellular industry remains strong, say some analysts.
One sign that the cellular carriers are financially healthy is that several carriers have had enough cash to take advantage of recent low interest rates and refinance debt, said Cindy Motz, a vice president at Credit Suisse First Boston.
In terms of earnings, AirTouch Communications Inc. stole the show with a net income that rose nearly 600 percent for the fourth quarter to $97 million compared with $14 million during the fourth quarter of 1996. Net income of $394 million for the year was 120 percent higher than net income of $179 million for 1996.
Analysts attribute AirTouch’s stunning results, however, more to its diversification into PCS and international markets, than to its cellular business. Indeed, AirTouch’s U.S. PCS subscriber base grew 922 percent to 92,000 last year, while its U.S. cellular subscriber base grew 26.6 percent to 4.3 million.
AirTouch added 1.35 million proportionate international cellular customers during the year. The company said its international subscribers now account for 42 percent of AirTouch’s cellular and PCS customer base and 44 percent of the total company 1997 proportionate revenues.
According to David Roddy, chief telecom economist at Deloitte & Touche Consulting Group Inc., carriers that have interests in international markets are more insulated from the impact of domestic competition. Likewise, carriers who have invested in both cellular and PCS properties can reap the benefits of high growth in PCS coupled with the stability of cellular.
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