Leap Wireless International Inc. reported delayed first-quarter results that were in line with recently released guidance. Leap previously stated that the delayed reporting was due to accounting issues.
The carrier said it added 45,575 net subscribers during the first quarter, counting 1.615 million customers at the end of March. Leap’s customer growth matched guidance for fourth-quarter and full-year 2004 results, but fell short of the 65,691 subscribers the carrier added during the first quarter of 2004.
The year-over-year shortfall was due to a 2.6-percent drop in gross customer additions and an increase in customer churn from 3.1 percent during the first quarter of 2004 to 3.3 percent this year. Al Moschner, Leap’s chief marketing officer, noted that customers cited a desire for additional features from Leap’s core products as the highest reason for churn.
Leap reported that average revenue per user increased from $37.45 during the first quarter of 2004 to $39.03 this year, which was at the high end of its guidance. Boosting the carrier’s ARPU was an increase in customers using its BREW-based Cricket Clicks offering. Leap’s management noted that a “double-digit” percentage of its customer base had BREW-capable handsets and that a “double-digit” percentage of those customers were using BREW services.
Leap also expanded its recently launched Travel Time roaming service to 10 markets and claimed to have several thousand customers signed up for the offering, with plans to expand the service into all of its markets by early next month.
The carrier’s cost per gross addition also increased from $124 last year to $128 this year, while the cash cost per user dropped from $20.08 during the first quarter of 2004 to $18.94 this year.
Total revenues surged more than 10 percent year-over-year from $206.8 million during the first quarter of 2004 to $228.4 million this year. Leap previously said it expected to post between $223 million and $228 million in revenues during the quarter.
Net income improved from a loss of $27.8 million during the first quarter of 2004, a loss of 48 cents per share, to a return of $12.7 million this year, or 21 cents per share. Leap’s management noted the positive income was its first since emerging from bankruptcy protection last year.
Leap also updated its full-year guidance. The carrier dropped the low end of its net customer additions’ forecast from 150,000 subscribers to 125,000 subscribers, while keeping the high end at 200,000 subscribers; said it expects full-year churn of between 3.5 percent and 4 percent; and forecast revenues of between $890 million and $950 million.
Leap’s Chief Executive Officer Doug Hutcheson said the low-end guidance change was due to the carrier expecting its recently launched products to begin gaining traction later in the year.
In addition, Leap nearly doubled its capital expenditure forecast for the year, saying it expects to spend between $175 million and $230 million instead of the previous guidance of between $110 million and $120 million. The new forecast includes capex of $20 million to $25 million associated with the buildout and launch of service in Fresno, Calif., and expansion and network changeout of its existing Visalia, Modesto and Merced, Calif., markets.
Leap also linked the increase to the development of 13 markets the carrier bought in Auction 58.
