LITTLE ROCK, Ark.-Alltel Corp. posted a disappointing 20,887 internally driven net customer additions during the third quarter, less than half the 58,254 customers the carrier added in 2004 and below analyst estimates. Alltel attributed the shortfall to higher churn in markets it recently acquired from Cingular Wireless L.L.C. that resulted in the loss of 67,000 customers.
Analysts said they expect Alltel to lose the remaining 119,000 customers in those markets as the carrier is turning off the legacy GSM network at the end of the year and plans to install CDMA technology.
Alltel added more than 1.3 million subscribers following its acquisition of Western Wireless Corp., which closed during the third quarter. The carrier ended the quarter with 10.4 million total wireless customers and is the industry’s No. 5 operator.
Alltel’s customer churn increased from 2.33 percent during the third quarter of 2004 to 2.37 percent this year, highlighting the issues it had in the markets it acquired from Cingular.
Average revenue per user surged $2.84 year-over-year from $45.24 during the third quarter of 2004 to $48.08 this year. Wireless data services contributed $2.16 to ARPU during the quarter.
Alltel’s wireless revenues, which the company said accounted for 70 percent of its total revenues following the Western Wireless acquisition, jumped more than 30 percent year-over-year from $1.3 billion during the third quarter of 2004 to $1.7 billion this year. Total company revenues jumped 20 percent from $2.1 billion in 2004 to $2.5 billion this year.
Net income also improved from $323.2 million during the third quarter of 2004 to $361.2 million this year, though earnings per share dropped slightly from 92 cents per share last year to 90 cents per share this year. The EPS drop was due to a 19-percent increase in outstanding shares.