LUBBOCK, Texas-Sprint Nextel Corp.’s largest CDMA affiliate Alamosa Holdings Inc. posted a 65-percent jump in revenues during the third quarter from $211.4 million in 2004 to $349.4 million this year. The results were slightly below estimates of around $360 million in revenues during the quarter.
The strong growth was bolstered by Alamosa’s acquisition of fellow affiliate AirGate PCS Inc. earlier this year, which contributed $103.7 million in revenues during the third quarter. Pulling out the AirGate contributions, Alamosa’s revenues grew a more modest 16.8 percent year-over-year.
Alamosa’s net income also improved from a loss of $274,000 during the third quarter of 2004, which was small enough to not result in a loss per share, to a return of $1.8 million this year, or a return of 1 cent per share. Analysts were expecting the carrier to post around $20 million in net income for the quarter.
Alamosa reported last month that it added 33,000 customers during the third quarter, including 28,000 subscribers through its Alamosa operations and 5,000 customers through the AirGate operations. The customer growth was well below the 52,000 combined subscribers added during the second quarter and short of analysts’ estimates of between 40,000 and 45,000 net customer additions.
Alamosa ended the quarter with 1.48 million subscribers.
Alamosa’s management attributed the shortfall to “external factors” and parent-company Sprint Nextel’s re-branding efforts during the quarter.
“The quarter was challenging due to lower consumer confidence due to higher energy prices and the local and national impacts of hurricane season along with competitive positioning in the wireless sector in advance of the merger and launch of the new brand by Sprint Nextel during August and September,” said David Sharbutt, chairman and chief executive officer of Alamosa.
The operational challenges also impacted customer churn, which increased sequentially from 2.1 percent during the second quarter to 2.5 percent during the third quarter. Average revenue per user also deteriorated from $57 during the third quarter of 2004 to $55 this year.
Alamosa’s management noted little progress regarding the carrier’s ongoing negotiations with Sprint Nextel concerning violations of its affiliate agreement associated with Sprint Corp.’s acquisition of Nextel Communications Inc. in August.
“Discussions with Sprint to date have failed to lead to a mutually satisfactory agreement,” Sharbutt said.
Analysts noted that it’s becoming increasingly likely that a re-affiliation agreement will not be reached and that Sprint Nextel likely will be forced to acquire the affiliate.
A report last month from Zachary Research claimed Sprint Nextel and Alamosa had reached an understanding to re-work their affiliate agreement or have Sprint Nextel acquire Alamosa, but were keeping details of the agreement confidential until Sprint Nextel’s pending appraisal process with affiliate Nextel Partners Inc. was completed.
Sprint Nextel acquired affiliate US Unwired Inc. in July for $1.3 billion; and IWO Holdings Inc. and Gulf Coast Wireless L.P. in late September for $427 million and $287.5 million respectively.
Alamosa’s stock was trading up more than 7 percent early Tuesday at $15.52 per share.
