Powertel Inc. President and Chief Executive Officer Allen Smith hinted the company’s national roaming rates could fall substantially in the coming months.
The carrier today charges 50 cents per minute with a 25-cent toll fee for roaming outside of its Global System for Mobile communications footprint. Allen said Powertel is working with other GSM carriers to aggressively lower rates. National operators like AT&T Wireless Services Inc. and Sprint PCS are offering aggressive rate plans that eliminate long-distance and roaming charges.
“I don’t want to pre-announce anything,” said Smith during the company’s conference call reporting first-quarter earnings. “We have not had the impact [other operators] have had with AT&T and Sprint taking customers, but customers have become more aware of the national-type rate plans.”
Smith said the company’s strong 12-state personal communications services footprint in the Southeast has given it a competitive advantage over national players. Most customers roam within the company’s footprint.
“Powertel’s coverage is a major competitive advantage,” said Rod Dir, chief operating officer with Powertel. “National carriers are limited in coverage in the Southeast … We are continuing to find out that a small percentage of customers roam outside our footprint. National carriers even say the same thing.”
Powertel said it added about 43,000 PCS customers during the first quarter, closing the period ended March 31 with 338,000 subscribers. Of its subscriber adds, 27,000 were prepaid. Powertel said it expects 50 percent of its net additions to consist of prepaid customers going forward.
Average revenue per unit for prepaid customers was $52.99, significantly higher than ARPU of $40.05 for postpaid customers. Powertel attributed the higher prepaid number to competitive pricing and extended coverage for prepaid customers. Prepaid customers are replenishing their prepaid cards at a high rate, said the company.
SoundView Financial Group reiterated its “buy” rating on Powertel following the company’s announcement. Powertel substantially beat Wall Street’s earnings estimates and recorded a PCS EBITDA loss 30-percent lower than anticipated.
The West Point, Ga.-based carrier expects positive operating cash flow next year. The company’s improvement in EBITDA losses was attributed to Powertel reinstating activation fees and increasing handset prices from $49 to $99. The activation fee has helped increase ARPU and reduce churn, said Tim O’Neil, wireless analyst with SoundView.
Powertel reported a decline in overall monthly postpaid PCS churn from 4.1 percent in the fourth quarter to 3.4 percent in the first quarter. PCS EBITDA loss for the quarter was $15.1 million. Total PCS revenue and sales were $56.9 million in the first quarter, compared with $48.2 million in the fourth quarter. On a consolidated basis, Powertel reported total revenue and sales of $62 million for the first quarter, compared with $53.3 million the previous quarter. Net loss after preferred dividends was $63.8 million, or $2.33 per share, compared with a loss of $88.5 million, or $3.26 per share, in the fourth quarter.
