WALL, N.J.—Centennial Communications Corp. cut its earnings guidance for the 2006 fiscal year, which ends May 31. Instead of a consolidated adjusted operating income of $370 million to $390 million, Centennial dropped its operating income prediction to between $350 million and $370 million.
The company also cut its consolidated capital expenditures outlook from $160 million to $150 million.
Stockholders reacted to the news with a sell-off; by early afternoon, Centennial’s stock had dropped nearly 10 percent from its opening price of $8.97 per share.
Centennial said the adjustment reflected weak subscriber growth in its Caribbean wireless segment, higher customer acquisition costs due to strong U.S. customer activations and higher costs due to minutes of use and equipment expenses from GSM handset upgrades. The carrier also said it expected postpaid average revenue per user in Puerto Rico to fall below $70 for the fiscal third quarter because of lower access and airtime revenue.
As far as customer figures, Centennial estimated that it would add about 20,000 postpaid customers for the fiscal third quarter ending Feb. 28, compared with a loss of 1,600 postpaid subscribers during the same quarter in 2005. However, the operator does not expect to add postpaid subscribers in the Caribbean, where it previously added 13,200 net postpaid customers.
“We took many important steps during 2005 to improve an already strong competitive position in each of our local markets, and are beginning to see good progress as we measure the early impact of these initiatives,” said Michael J. Small, chief executive officer of Centennial.
