Consumer appetite for wireless services continued unabated during the second quarter as the nation’s seven largest operators posted a 39-percent jump in net customer additions to more than 6 million new subscribers compared with the 4.4 million they added during the second quarter of 2004. Those seven operators also managed to add nearly 2 million more customers through the first half of this year compared with the first six months of 2004 when the industry went on to post near-record levels of customer growth for the year.
Analysts were expecting the entire wireless industry to add around 5.6 million customers for the second quarter, which would have been in line with 2004 results, but it appears the industry has continued to find ways to attract consumers. Merrill Lynch recently said it was raising its guidance for full-year growth from 22 million to 23 million customers driven in part by growth in family plans and incremental youth segment penetration.
“Subscriber growth does not appear to be slowing in 2005 after a strong 2004,” the firm noted.
T-Mobile USA Inc. rounded out the second quarter reporting last week, posting 972,000 net customer additions, which fell short of the nearly 1.1 million customers the carrier added during the second quarter of 2004, but ahead of analysts’ estimates of between 700,000 and 900,000 net subscriber additions.
Reflecting a growing dependence on prepaid customers, T-Mobile USA noted that about 30 percent of net additions during the second quarter were non-contract customers compared with 19 percent during the first quarter and 14 percent during the second quarter of 2004. The carrier added that prepaid subscribers accounted for 13 percent of its 19.2 million subscribers at the end of the second quarter compared with 11 percent at the end of the second quarter last year.
Despite the increasing reliance on prepaid customers, T-Mobile USA reported that customer churn remained stable year-over-year at 2.8 percent. Average revenue per user dropped slightly from $55 during the second quarter of 2004 to $54 this year. T-Mobile USA noted that data services increased from 5 percent of postpaid ARPU during the second quarter of 2004 to 8.2 percent this year.
Some of the customer growth reported by nationwide and larger regional operators could be coming from smaller regional players that continue to balance slowing customer growth with improving revenues.
- Leap Wireless International Inc.’s second-quarter net additions dropped from 9,000 customers during the second quarter of 2004 to 3,000 customer additions this year. Leap ended the second quarter with 1.618 million total customers.
The drop coincided with an increase in customer churn from 3.7 percent last year to 3.9 percent this year. Leap also reported that ARPU jumped more than 5 percent from $37.28 during the second quarter of 2004 to $39.24 this year.
- Sprint Corp.’s largest wireless affiliate Alamosa Holdings Inc. previously reported 52,000 net customer additions during the second quarter, which was a 10-percent improvement compared with the 47,434 net customer additions posted by Alamosa and its recently acquired fellow affiliate AirGate PCS Inc. Alamosa said it ended the quarter with 1.447 million total customers.
Alamosa’s ARPU remained flat year-over-year at $56, while customer churn dropped from 2.2 percent during the second quarter of 2004 to 2.1 percent this year.
- Sprint PCS wireless affiliate UbiquiTel Inc. posted 14,600 net customer additions during the second quarter, short of the 16,900 subscribers the carrier added during the second quarter of 2004 and below analysts’ estimates of around 16,500 net customer additions. UbiquiTel ended the quarter with 423,600 subscribers, including 120,600 reseller customers.
Customer churn improved from 2.7 percent during the second quarter of 2004 to 2.3 percent this year, which was better than estimates of 2.4 percent, while ARPU fell from $58 last year to $56 this year.
- Sprint affiliate IWO Holdings Inc., which emerged from bankruptcy protection in early June, said it lost 5,485 customers during the second quarter, which the carrier attributed to the discontinuation of its Chat-Pak prepaid program that it inherited from former parent company and fellow Sprint affiliate US Unwired Inc. The carrier added 5,963 customers during the second quarter of 2004. IWO said it ended the first half of the year with 237,172 total customers, which included 104,912 reseller subscribers.
Reflecting the prepaid rate changes, IWO’s customer churn jumped from 2.5 percent during the second quarter of 2004 to 4.3 percent this year. IWO noted that postpaid churn dropped from 2.4 percent in 2004 to 2.3 percent this year. IWO’s ARPU dropped 4.5 percent from $52.52 during the second quarter of 2004 to $50.17 this year.
- Regional wireless operator Centennial Communications Corp. said it added 8,500 domestic wireless customers during its fourth fiscal quarter ended May 31, which was a 15-percent drop from the 10,100 subscribers the carrier added during the fourth quarter of 2004. Centennial noted that full-year domestic net additions increased slightly from 22,100 customers during fiscal 2004 to 23,000 net customer additions this year, and it ended fiscal 2005 with 586,000 total domestic customers.
The fourth-quarter customer growth shortfall was attributed to a 5.5-percent drop in gross customer additions, which offset flat customer churn of 2.1 percent. The full-year customer growth was powered by a 5-percent increase in gross customer additions, which offset an increase in customer churn from 2.3 percent last year to 2.4 percent this year.
Similar to other regional wireless operators, Centennial posted an increase in ARPU from $49 during the fourth quarter of 2004 to $51 this year. Full-year ARPU jumped more than 8 percent from $48 in fiscal 2004 to $52 this year.
- Former AT&T Wireless Services Inc. affiliate Cincinnati Bell Inc. said it lost 10,000 wireless customers during the second quarter, ending the first half of the year with 469,000 subscribers.
Cincinnati Bell added 9,000 wireless customers during the second quarter of 2004 when it was still an AWS affiliate, but since gaining its independence from AWS last August, it has lost 26,000 wireless subscribers. The company added that it expects to generate positive net postpaid customer growth in the fourth quarter of this year.
Postpaid customer churn increased from 1.95 percent during the second quarter of 2004 to 2.2 percent this year. Postpaid ARPU dropped from $56 during the second quarter of 2004 to $48 this year, while prepaid ARPU jumped 10 percent from $19 last year to $21 this year.
