Personal communications services operator Powertel Inc. reached positive operating cash flow in the first quarter and added a company-record 110,000 subscribers.
The Southeast PCS company, which analysts suspect soon may be gobbled up by VoiceStream Wireless Corp., said its growth in prepaid customers helped propel subscriber growth that surpassed the fourth-quarter Christmas push of 108,000 subscribers. Seventy percent of the carrier’s subscriber additions were prepaid.
“The prepaid segment of our business continues to be a core strategy,” Powertel Chief Operating Officer Rod Dir told analysts last week. “Powertel’s prepaid customers use fewer minutes yet pay a higher rate with no billing costs or bad debt. We believe that without a good prepaid solution, the wireless industry will not achieve the significant market penetration we’ve seen in other countries.”
The Global System for Mobile communications operator said penetration in the first quarter reached 3.9 percent of the carrier’s covered pops. The company also aggressively added 341 new distribution points in the first quarter, reaching more than 1,300 points of presence that all sell prepaid service, said Powertel.
“We have not seen anyone on the market that robust,” Dir said, referring to the company’s prepaid offering. The carrier believes its competitive advantage lies in the 35 cents per minute it charges for local and long-distance calls, its extensive coverage of the service and an intelligent network that allows customers to check the status of their accounts.
Dir also outlined the company’s wireless data strategy. Powertel this fall plans to introduce two-way short messaging service that will allow customers to pull content from Wireless Application Protocol-enabled Web sites or receive push content such as stocks, news and sports information.
“We are incrementally enhancing our voice infrastructure to offer value-driven wireless data to increase revenue per user,” said Dir. “We are carefully aligning ourselves with various partners. Customers will go to a single portal allowing them to personalize content, locations, Web-based calendaring and e-mail.”
For specialized content, Powertel said it is working with Sonera Zed, a portal provider established by Finnish operator Sonera, which owns stakes in Powertel and Voice-Stream Wireless Corp.
Powertel is spending a total of $10 million for a General Packet Radio Service network, which includes software, billing enhancements and all customer-care support systems. The carrier has signed an agreement with its vendor Ericsson Inc. for equipment and plans to test the service in July, offering commercial service by the end of the year in Atlanta and in the rest of its markets next year. Dir said the company will have at least one vendor that can deliver GPRS handsets by the time it commercially launches service. GPRS technology is a packet-data enhancement most GSM operators will deploy for higher speed data applications. Powertel plans to target the GPRS service to business customers first.
Powertel’s operating cash flow in the first quarter reached $626,808, compared with a loss of $12.2 million in first-quarter 1999. Net loss was $52.9 million, or $1.74 per share, compared with a net loss of $63.8 million, or $2.33 per share, the previous year. Total revenue and sales for the first quarter reached $100.1 million, compared with $53.9 million the first three months of 1999.
Powertel’s churn, however, increased because of prepaid. The churn rate for the first quarter was 3.6 percent, compared with 3 percent in the fourth quarter. Postpaid churn for the first quarter remained flat at 2.6 percent from the fourth quarter while prepaid churn was 4.9 percent, compared with 3.8 percent in the fourth quarter. Average revenue per user was $47.72 in the first quarter, compared with $48.29 in the fourth quarter.
