Sprint PCS added 826,000 net customer additions for the first quarter ended March 31, topping analysts estimates of 800,000 net additions. The carrier said its business customer base jumped 73 percent fueled by its Sprint PCS Wireless Web for Business offering.
Net operating revenue for the wireless carrier increased 68 percent to $2.05 billion from $1.22 billion reported for the first quarter of 2000. Average revenue per user increased from $57 last year to $60 this year, in-line with estimates, while the cost of customer acquisition dropped 8 percent to $360 per customer, below estimates of $371 per customer. Customer churn also fell from 2.8 percent for the fourth quarter of 2000, to 2.5 percent for the first quarter of 2001.
Even with its strong first quarter numbers, the carrier expressed near term caution for the industry due to slowing economic conditions.
“Signs of a slower economy were evident in the first quarter,” said Ron LeMay, president and chief operating officer of Sprint Corp. “We continue to view the near term with a certain degree of caution.”
The carrier noted it expects to add 4.1 million customers for the year, equivalent to last year’s customer additions.
Rival carrier Verizon Wireless announced first quarter additions of 521,000 customers earlier this month, well below analysts’ predictions of more than 700,000 customer additions.
Sprint PCS also said current market conditions would make it difficult to proceed with an equity offering to cover growth initiatives and that other sources of equity were being considered. The carrier was expected to raise as much as $5 billion this year to cover expansion costs.
“We expect the company to consider monetizing its tower assets, which could raise approximately $1.8 billion for the company, cutting the liquidity needs from an equity offering in half,” said ING Barings L.L.C. in a research report following Sprint’s quarterly announcement.
Sprint PCS’ stock was up 5 percent in early Tuesday trading at $24.15 per share.
