Wireless carriers continued the arduous task of repairing networks in the Gulf Coast region hit hard by Hurricane Katrina last month, though few operators have released financial details of the repairs. The federal government noted last week that it could cost a total of up to $200 billion to repair the region.
Analysts have downplayed the financial impact of the storm on nationwide wireless operators though, citing the small percentage of their total customer bases in the affected areas, but adding that regional operators could see larger impacts.
Sprint Nextel Corp. was one of the few to provide a financial update, reporting last week that repairs will cost between $150 million and $200 million net of expected insurance recovery. The carrier said the estimates include capital and operating costs primarily associated with restoring network infrastructure and retail operations, along with billing relief for impacted customers.
Sprint Nextel claimed last week that more than 90 percent of its wireless network in Mississippi and more than 70 percent in Louisiana are operational, though many sites in New Orleans still are under water and will take longer to restore. The company added that it is still working to restore wireline services in the area, noting long-distance and data-service customers along the Gulf Coast continue to experience outages.
Sprint Nextel expects the financial impact to occur during the final quarters of this year and be completed substantially by year-end.
Cingular Wireless L.L.C. parent company BellSouth Corp. reported earlier this month initial hurricane-related damage estimates of between $400 million and $600 million. BellSouth reported that 10 of its central switching centers in Mississippi were severely damaged, and five in New Orleans were being repaired. The company also claimed that more than 11,000 poles and 26,000 cable spans were damaged and about half of its 4.9 million lines were impacted.
Verizon Communications Inc. said it was sending 100 technicians and 10 supervisors to the New Orleans area to help BellSouth restore landline services in the region.
Analysts estimated BellSouth could see a long-term revenue impact of about 4 cents per share on an annualized basis, or about 2 percent of 2006 earnings-per-share estimates, due to long-term impairments related to the hurricane.
Cingular said it expects to provide financial guidance related to the storm when it releases third-quarter results in mid-October.
Regional wireless operator Cellular South put its initial restoration costs at between $8 million and $12 million, and reported that its network in southern Mississippi was fully operational as of Sept. 9. The carrier said it worked with fellow rural operators Midwest Wireless and Cellular South of Southern Illinois on restoring Cellular South’s network.
Verizon Wireless President and Chief Executive Officer Dennis Strigl sent a letter to Federal Communications Commission Chairman Kevin Martin last week updating the commission on the carrier’s progress in restoring services to areas hit by Hurricane Katrina. Strigl said the carrier has restored service to more than 95 percent of its geographic coverage in the areas impacted by the hurricane, and it has restored service to nearly 350 of the 400 cell sites that were knocked out by the hurricane and subsequent flooding.
Verizon Wireless said it was now concentrating its recovery efforts in the New Orleans area where 60 sites remained down last week, largely due to T-1 outages. Strigl added that those still impacted towers principally are in downtown New Orleans with about one-third of those sites still inaccessible due to high water or security concerns.
Strigl also noted that earlier last week Verizon Wireless instituted a new policy not to charge its postpaid customers in the affected areas for airtime minutes used during September that exceed their monthly airtime allowances. The carrier also is waiving all charges for long distance, roaming and text messaging through the end of the month.
Verizon Wireless reported earlier this month that it was not requiring customers to change their price plans, extend their contracts or enter into new contracts if they are issued temporary numbers. The carrier also said it would not disconnect a customer’s number for nonpayment, all past-due notices have been stopped, and collection agencies have been notified not to contact any of those customers.
In addition, Verizon Wireless said it has issued airtime credits and extended expiration dates for prepaid customers, and it has suspended automatic payments from subscriber bank accounts.
Several operators announced similar initiatives in the wake of the hurricane.
