ATLANTA—Cingular Wireless L.L.C. kicked off 2006 with strong first quarter results, including driving its churn rate down to a company record low of 1.9 percent overall, with 1.6 percent postpaid churn. While Cingular’s postpaid average revenue per user showed growth, the carrier’s total ARPU continued to slide.
Gross customer additions were flat at 4.7 million subscribers during the quarter, but the lower churn rate pushed Cingular’s net customer additions up to 1.7 million subscribers for the quarter—a boost of more than 20 percent from the 1.4 million that it added in the first quarter of 2005. Cingular said it added 900,000 retail postpaid subscribers, 147,000 prepaid customers and 632,000 subscribers through resellers, which Bear Stearns analyst Philip Cusick noted was an improved mix.
“Cingular got out of the gate fast in the first quarter of 2006,” said Stan Sigman, Cingular’s president and chief executive officer. “We continue to move in the right direction on our major metrics—churn, customer additions, margins, revenue growth and more.”
Cingular’s revenue for the quarter hit $9 billion, an increase of 9 percent over 2005’s first quarter. Equipment revenues in particular were healthy, jumping more than 20 percent from the $810 million generated in the first quarter of last year. Capital expenditures climbed nearly 50 percent to $1.4 billion—which Sigman credited for helping improve Cingular’s churn rate.
“Our continuing improvement in churn is directly related to the investments and enhancements we are making in our network, day in and day out, in cities and towns all around the country,” Sigman said. “Customers experience these improvements for themselves, and as a result, not only buy from Cingular but stay with Cingular.”
However, the carrier’s overall ARPU skidded 2.3 percent to $48.48 compared to the first quarter of 2005—when ARPU already was down 3.3 percent from 2004’s first quarter. Cingular blamed the ARPU dip on the number of wholesale customers in the carrier’s customer base, and added that the impacts “were largely offset by a continued increase in data ARPU.” The carrier’s data ARPU was $5.22, reflecting growth of more than 40 percent from last year’s first quarter and almost 11-percent sequential growth.
The largest U.S. carrier said that as of the first quarter, it had more than 25 million active data customers and delivered 91 million multimedia messages as well as 6.8 billion text messages.
Cingular ended the first quarter with 55.8 million total customers on its network.
