It was a week of mixed results for regional carriers, as numbers trickled in from a handful of operators-some of which had delayed their reporting or had to restate prior earnings.
Leap Wireless International Inc. had a slightly weaker-than-expected fourth quarter, but the company emphasized that it is looking forward to a strong first quarter of 2006. Leap said it added about 46,000 net new retail customers in the fourth quarter, fewer than the 60,000 net customer additions estimated by some analysts. The carrier ended last year with a customer base of 1.67 million subscribers. Leap recorded a churn rate of 4.1 percent for the quarter and 3.9 percent for the full year. Average revenue per user stood at $39.74 for the fourth quarter, up considerably from the $37.29 that Leap recorded in fourth-quarter 2004.
Revenues for the fourth quarter totaled $228.9 million, up $22 million from the same time in 2004. (Leap emerged from bankruptcy in August 2004.)
Leap’s posted operating income nearly doubled during the quarter-up $5.9 million to $10.8 million-and the carrier counted $5 million in net income.
Leap outlined ambitious plans to launch in new markets covering 14 million to 20 million potential customers by the end of 2006, gain between 90,000 to 105,000 net retail customers in the first quarter, and cut its churn to about 3.3 percent in the same time period. The company also signed a deal to pay $38.1 million to bankrupt Urban Comm-North Carolina Inc. for 13 wireless spectrum licenses in the Southeast.
Shentel
The fourth quarter was kind to Shenandoah Telecommunications Co., which outpaced analysts’ expectations as it brought in total revenues of $39.2 million, a jump of more than 21 percent from the same quarter in 2004.
Shentel, which provides service in the Mid-Atlantic and Southeast and is a Sprint Nextel Corp. CDMA affiliate, delayed the release of its financial results by about two weeks after discovering minor errors in how the company accounted for its tower leases. Shentel’s net income in the fourth quarter was boosted by improved performance of its wireless business and lower costs in reporting and accounting compliance, the company reported. Shentel’s net income for the quarter stood at $2.8 million, up from $1.9 million in the same period of 2004.
The operator previously said it added about 6,500 net retail wireless customers in the fourth quarter, up 43 percent from the same quarter in 2004. Shentel also said it added nearly 4,900 wholesale customers and closed out 2005 with about 123,000 retail customers and roughly 38,700 wholesale customers.
SunCom
SunCom Wireless Holdings Inc. posted a loss for 2005, which the company said was due to a transitional year of migrating former AT&T Wireless Services Inc. customers onto SunCom’s network.
The regional operator-and former AWS affiliate-had warned in January that it expected a $14 million loss, and ended up reporting a $13.6 million loss in adjusted earnings before interest, taxes, depreciation and amortization for the fourth quarter. Net cash used by operating activities put the company $34.4 million in the red for the fourth quarter, way down from the $12.8 million in operating revenue that SunCom netted in the fourth quarter of 2004.
“The fourth quarter represented the first complete quarter in which SunCom Wireless provided all network, billing and customer-care services for our subscribers in the territories we received from AT&T Wireless since we acquired those properties in late 2004,” said Michael Kalogris, chairman and chief executive officer of SunCom. “The transition we undertook in 2005 was disruptive to some of our customers, but once we moved past the integration, we experienced positive subscriber results.”
SunCom’s service revenue declined by 4.2 percent sequentially to $149.6 million. ARPU slid from $54.66 a year ago to $51.93 in the fourth quarter of 2005; SunCom said that was due to a shift toward cheaper rate plans and add-a-phone lines, along with the “lingering effects” of handset credits given to customers to encourage them to migrate to SunCom’s services.
SunCom blamed its 3.2 percent churn rate for 2005 on subscriber deactivations as the company migrated former AWS customers to SunCom’s network. However, the churn rate had improved to 2.7 percent by the fourth quarter, down from 3.8 percent in the third quarter. The operator gained 46,272 net customer additions during the fourth quarter and ended the year with 965,822 subscribers.
U.S. Cellular
Meanwhile, U.S. Cellular Corp. released revised figures on the impact of the financial restatements the company has been working on since November, and put out a few preliminary figures on its operations for the fourth quarter and year-end 2005.
The company considerably upped its estimate of net losses for 2002. That year, U.S. Cellular reported a loss of $27 million and had anticipated that it would adjust that figure upward or downward by $2 million or less. According to the new adjustment range, the actual losses for 2002 will end up being between $33 million and $37 million due to adjustments in deferred income tax.
The changes to the restatement boosted net income by an estimated $5 million to $9 million in the third quarter of 2004, above the $2 million to $6 million the company had previously expected. The other time periods that will be restated-including the first and second quarters of 2005, the third quarter of 2004 and the years 2000, 2001, 2003 and 2004-still are expected to be within the range of $3 million more or less than originally reported.
The carrier reported it is likely to have operating revenues of between $750 million and $850 million for the fourth quarter of 2005, up from the restated $675 million to $725 million in the fourth quarter of 2004. The company estimated operating income in the fourth quarter of 2005 was between $55 million and $85 million, up from a restated range of $20 million to $60 million in the same quarter of the previous year.
U.S. Cellular said its operating income was boosted by lower operating costs and gains on sales and an exchange of wireless assets with Alltel Corp. in the fourth quarter.
The company’s deadline to file its restatements, year-end and quarterly results since the third quarter of 2005 is June 30, 2006.
