Showing off the diverse nature of the wireless industry in North America, a recent survey and ranking of operators’ third-quarter results rendered a top-five ranking that included carriers serving a nationwide business customer base, a Canadian operator, the region’s largest carrier, a regional affiliate and a rural operator.
The survey, conducted by independent wireless consultant Jeffrey Hines, rated 20 North American wireless operators based on five criteria: subscriber growth as measured by penetration gain; average revenue per user; customer churn; earnings before interest, taxes, depreciation and amortization per subscriber and cost of acquisition. The carrier with the highest result in each category, and thus the lowest overall ranking, came out on top.
Nextel Communications Inc., which has made a point this year of stressing its operational focus, trumped its competitors in the rankings with an overall score of 32, thanks to its industry-leading ARPU, second-best EBITDA per subscriber and third-best customer churn results. The only category where Nextel was out of the top 10 was in cost of acquisition, where it finished 18th.
“The only area of weakness, relative to the other North American operators, would appear to be the high acquisition costs, which were $473 per subscriber added vs. the median industry COA of $396,” Hines noted. “However, certainly you get what you pay for and the high ARPU and low churn generated by Nextel make the higher-than-typical acquisition costs somewhat a moot point.”
Canadian wireless operator Telus Mobility, which Hines singled out as having one of the best management teams in the wireless industry, finished a close second overall to Nextel, with a total score of 35. Telus posted strong second-place finishes in subscriber growth and customer churn. Canada’s depressed monetary exchange rate also was reflected in Telus’ results, with the carrier ranked third in cost of acquisition and 17th in ARPU after the Canadian dollar was converted into U.S. currency.
Verizon Wireless Inc. and Triton PCS Inc. tied for third place with a score of 37. Verizon Wireless was helped by its third place in subscriber growth and fifth in EBITDA per subscriber, while Triton posted fifth- and fourth-place rankings respectively in the same categories.
Rounding out the top five was rural operator Dobson Communications Corp., which posted industry-leading EBITDA per subscriber of $33.86 on its way to a total score of 39.
Other notable results on the list included:
c Nextel Partners Inc., which finished in a tie for sixth place with Canadian carrier Rogers Wireless due in part to a top mark in customer churn and second-place ARPU results;
c T-Mobile USA Inc., which though it finished 11th out of 20 carriers surveyed, led all in subscriber growth;
c And Canadian operator Microcell, which similar to Telus, rode the exchange rate to a top placing in cost of acquisition and a last-place finish in ARPU and an eventual 16th place finish overall on the list.
Overall, Hines noted the carriers sampled reported a 15-percent increase in service revenues for the quarter compared with the previous year due to steady ARPU offsetting the 15 percent in subscriber growth, a 29-percent increase in EBITDA and a decrease in free cash flow losses.
Those positives were offset by a drop in net customer additions from 4.9 million during the third quarter of 2001 to 2.5 million this year, average customer churn increasing from 2.6 percent last year to 2.7 percent this year and median cost of acquisition rising from $341 last year to $396 this year.
