AT&T Wireless Services Inc. reported fourth-quarter and year-end 2003 results this morning ahead of its previously stated release date of Jan. 27 and formally announced that its board of directors is looking at “strategic alternatives” for the company, having received “significant interest” from a number of potential suitors.
The carrier said it added 128,000 net subscribers during the fourth quarter of last year, which was well below the 705,000 customers the carrier added during the fourth quarter of 2002 though generally in line with reduced analysts’ estimates. For the full-year, AT&T Wireless added just more than 1 million subscribers ending 2003 with 22 million total customers.
Analysts noted a number of factors contributed to AT&T Wireless’ customer growth shortfall, including an increase in customer churn from 2.4 percent during the fourth quarter of 2002 to 3.3 percent in 2003, backoffice technical issues during the fourth quarter of 2003 and local number portability. The carrier noted it expected customer churn to remain “elevated” during the first half of this year.
“We did hit some operational rough spots in the fourth quarter, but the good news is that those issues are largely behind us,” said John Zeglis, chairman and chief executive officer of AT&T Wireless. “And we understand the challenges, such as churn, that we must continue to focus on this year.”
Average revenue per user also dropped from $60 during the fourth quarter of 2002 to $58.70 last year, while the cost per gross addition increased from $383 to $392.
Total revenues during the fourth quarter increased more than 4 percent from $4 billion in 2002 to $4.2 billion last year, while full-year revenues increased nearly 7 percent from $15.6 billion in 2002 to $16.7 billion last year. Net losses during the fourth quarter fell from $136 million in 2002, a loss of 5 cents per share, to $84 million in 2003, a loss of 3 cents per share. Full-year net income increased from a loss of $2.3 billion in 2002, a loss of 87 cents per share, to a return of $429 million last year, a return of 16 cents per share.
AT&T Wireless also said it has retained Merrill Lynch & Co. and Wachtell, Lipton, Rosen & Katz as advisors to its board of directors in the evaluation of its strategic alternatives, adding it would consider its options and “determine the course of action that is in the best interests of its shareholders.”
