Cingular Wireless L.L.C. reported 554,000 net customer additions during the first quarter of this year, which was a nearly 200-percent improvement compared with the 189,000 subscribers the carrier added during the first quarter of 2003 and brings the carrier’s total customer base to more than 24.6 million subscribers. The carrier noted customer churn dropped from 2.8 percent during the fourth quarter of last year to 2.7 percent during the first quarter of 2004 and that wireless local number portability is having a minimal impact on its subscriber results.
Cingular also reported that 94 percent of its network was covered by GSM/GPRS technology at the end of the first quarter, more than 53 percent of handsets in service were GSM capable and 66 percent of total minutes were being carried by its GSM network.
Despite a 5.5-percent year-over-year drop in average revenue per user from $50.76 during the first quarter of 2003 to $47.95 this year, Cingular said ARPU trends increased throughout the first quarter, with March results higher than January results. The carrier also noted data revenues increased 53 percent year-over-year due to increased text messaging, which increased to more than 1.3 billion messages sent during the first quarter, and an increase in downloaded content.
Total revenues increased more than 8 percent from $3.6 billion during the first quarter of 2003 to $3.9 billion this year, with adjusted earnings before interest, taxes, depreciation and amortization falling 7.7 percent from $1.2 billion last year to $1.1 billion this year.
In connection with Cingular’s financial release, AT&T Wireless Services Inc. pre-announced first-quarter results indicating the carrier lost 367,000 subscribers during the quarter, which was at the high end of analyst estimates and well below the 257,000 subscribers the carrier added during the first quarter of 2003. AWS explained the negative net adds were due to customer churn associated by the first wave of WLNP, a higher number than usual of customers not under contract and the residual effect of its fourth-quarter 2003 back-office problems on customer care and indirect distribution.
While AWS did not provide churn results, analysts estimated the carrier will report between 3.7 percent and 3.9 percent in churn during the quarter when it reports full quarterly results later this week, and ARPU will come in below expectations as the carrier reported flat year-over-year service revenues of $3.7 billion.
AWS did note that net customer additions improved during the quarter and was nearing breakeven by March, and it renewed more than 3.5 million customer contracts during the first three months of the year, which was double the amount of renewals during the first quarter of 2003.
Cingular, which announced in February that it would acquire AWS for approximately $41 billion, said it was not surprised by AWS’ poor quarterly results.
“AT&T Wireless’ first-quarter subscriber and revenue numbers, which were released this morning, are consistent with our expectations for the quarter,” said Stan Sigman, president and chief executive officer of Cingular. “The release indicates that management at AT&T Wireless is taking action to address the issues they are facing, but these results emphasize the importance of completing this deal as soon as possible.”
Cingular added that it still expects the acquisition to close before the end of the year.
