Alltel Corp., which completed its acquisition of Western Wireless Corp. earlier this week, reported mixed second-quarter wireless results that were highlighted by a steep climb in average revenue per user but tempered by slower-than-expected internal net customer additions.
Alltel said it added 53,593 internal customer additions during the quarter, which was a 65-percent drop from the 155,307 subscribers the carrier added during the second quarter of 2004 and below estimates of between 105,000 and 140,000 net customer additions. Alltel did post a 71-percent improvement in total net customer additions during the quarter from 155,307 subscribers last year to 266,223 customers this year due to its acquisition of several markets divested by Cingular Wireless L.L.C. as part of its acquisition late last year of AT&T Wireless Services Inc.
Alltel ended the second quarter with nearly 9.1 million total subscribers.
Analysts attributed the internal customer growth shortfall to a 9-percent drop in gross customer additions, which offset a slight drop in customer churn from 2 percent last year to 1.99 percent this year.
Alltel’s wireless ARPU surged 6 percent year-over-year to $50.55 during the second quarter, which was above analysts estimates of around $50 in ARPU and Alltel’s highest quarterly ARPU result in five years. The carrier attributed the increase to higher data usage and what it termed “quality customer growth.”
The cost to acquire a new customer jumped 13 percent from $313 during the second quarter of 2004 to $355 this year, while the cash cost per user leapt 9 percent from $21.68 last year to $23.64 this year.
Total wireless revenues climbed 16 percent from $1.253 billion during the second quarter of 2004 to $1.455 billion this year. Wireless revenues accounted for 64.4 percent of Alltel’s total revenues during the quarter compared with 61.4 percent during the second quarter of 2004. The company has said that following the acquisition of Western Wireless it expects wireless revenues to account for nearly 70 percent of total revenues.
Wireless segment income also increased 17 percent year-over-year from $261.6 million during the second quarter of 2004 to $306.9 million this year.
Alltel’s stock was trading down 95 cents per share early Thursday at $64.68 per share.
