Independent regional operators posted mixed second-quarter results that in most cases included sagging customer growth, but increased revenue per subscriber bolstered by growing wireless data usage.
Recently strengthened Alltel Corp., which closed its acquisition of Western Wireless Corp., was a prime example. The industry’s No. 5 operator said it added 53,593 direct customers during the quarter, 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.
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 posted a 71-percent improvement in total net customer additions during the quarter from 155,307 subscribers last year to 266,223 customers this year. The increase was 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.
Alltel’s average revenuer per user surged 6 percent year-over-year to $50.55 during the quarter, which was above analysts’ estimates of around $50 in ARPU and Alltel’s highest quarterly ARPU in five years. The carrier attributed the increase to higher data usage and what it termed “quality customer growth.”
The strong ARPU helped propel Alltel’s total wireless revenues up 16 percent, from $1.253 billion during the second quarter of 2004 to $1.455 billion this year.
Citing both technology and service-related issues, Rural Cellular Corp. said it lost 9,992 customers during the second quarter, compared with a gain of 8,144 customers during the same quarter in 2004. The carrier attributed the decline to issues encountered during the commercial introduction of its GSM networks in its Northeast, Northwest and South regions. Rural Cellular launched CDMA2000 1x-based services in its Midwest region last year.
The carrier has lost nearly 25,000 customers during the past 12 months and ended the first half of this year with 716,755 total subscribers. The customer defections have increased Rural Cellular’s postpaid churn from 1.8 percent during the second quarter of 2004 to 2.7 percent this year.
Rural Cellular reported that its quarterly ARPU increased more than 6 percent from $47 during the second quarter of last year to $50 this year. The carrier attributed the gain to increased access and features revenues during the quarter.
Rural Cellular’s total revenues climbed 5.4 percent from $126.6 million during the second quarter of 2004 to $133.4 million this year. Roaming revenues dipped slightly from $26.3 million in 2004 to $25.1 million this year, which dropped the roaming yield from 16 cents per minute last year to 14 cents per minute this year.
Fellow regional operator SunCom Wireless Holdings Inc. posted slightly better results, adding 3,979 customers during the second quarter compared with a loss of 833 customers during the second quarter of last year. SunCom said it ended the first half of the year with 965,106 subscribers.
The former AWS affiliate managed the turnaround despite a surge in customer churn from 2.63 percent during the second quarter of 2004 to 3.2 percent this year. SunCom Chairman and Chief Executive Officer Michael Kalogris attributed the growth to record second-quarter gross customer additions.
SunCom’s ARPU increased modestly from $56.68 during the second quarter of 2004 to $56.73 this year. Despite the relatively flat ARPU, SunCom managed a 7-percent increase in service revenues during the quarter, which was offset by a 40-percent drop in roaming revenues and resulted in flat year-over-year revenues of $212.9 million.
Regional Bell operating company Qwest Communications International Inc., which offers wireless services through a mobile virtual network operator agreement with Sprint Corp, posted similar results. The company said it added 1,000 wireless customers during the second quarter, which was its first positive quarterly result in three years, and ended the first half of the year with 744,000 wireless subscribers.
Qwest posted even stronger ARPU growth of 9 percent from $46 during the second quarter of 2004 to $50 this year. The company attributed the increase to new rate plans and product offerings and strong uptake of data services, and added that 90 percent of gross additions during the second quarter signed up for high-end national plans and more than 40 percent signed up for data services.
