The country’s continued slowing economy seemed to have little impact on wireless carriers reporting second-quarter results last week, with Sprint PCS, often used as a bellwether for the industry, and U.S. Cellular Corp. posting solid financial results and customer additions.
Sprint PCS surprised many with its strong second- quarter results, adding 843,000 net subscribers, ahead of many analysts’ forecasts, and reporting customer churn of 2.2 percent, well below both predictions and previous year numbers.
The carrier’s net additions came in ahead of forecasts of around 815,000 net additions, and left Sprint PCS with more than 12.5 million total subscribers. Customer churn numbers for the quarter bested the previous quarter’s 2.5 percent and analysts’ expectations of around 2.6 percent, with average revenue per user coming in at $61, compared with $59 during the second quarter of 2000.
“We believed this would be a strong quarter for PCS, however, the company topped even our optimistic expectations,” said Dave Rao, wireless telecommunications research associate with Robertson Stephens. “Good product mix, expanded distribution and a record low churn rate aided this result.”
Sprint PCS’ revenue for the quarter jumped from $1.4 billion during the second quarter of last year, to $2.2 billion this year, with operating losses falling from a loss of $469 million to a loss of $57 million.
The carrier expects the strong second-quarter results to continue through the third quarter and end of the year. “Despite difficult economic conditions, the PCS Group performed exceptionally well again in this quarter and we expect continued strong performance in the third quarter,” said Arthur Krause, chief financial officer for Sprint PCS.
While Sprint PCS wowed many with its strong subscriber additions, U.S. Cellular tempered soft customer adds with increased ARPU numbers and earnings per share, beating analysts’ expectations.
For the quarter, U.S. Cellular added 73,000 customers, below forecasts of around 100,000 subscribers. The company cited the slowing economy and aggressive pricing from a large national carrier, rumored to be Verizon Wireless, for the lackluster additions. ARPU for the quarter jumped more than $2.50 to $47.26 compared with the previous quarter, with customer churn falling from an already low 1.85 percent during the first quarter to 1.68 percent.
Diluted earnings per share came in at 67 cents per share, ahead of Wall Street analysts polled by Thomson Financial/First Call, who were expecting a return of 65 cents per share.
“Our second quarter results reflect our continued investment in adding and retaining customers,” said John Rooney, president and chief executive officer of U.S. Cellular. “The lower amount of net customer additions indicates that the overall economic downturn has affected traffic into our retail and agent locations.”
