Small and mid-size carriers posted mixed results last week, with most losing customers but improving their revenues and bucking the industry trend of sliding average revenue per user. However, some carriers managed to beat analysts’ expectations.
UbiquiTel Inc. reported a steep drop in new customers but bolstered its revenues. The Sprint Nextel Corp. CDMA affiliate is in the process of being acquired by Sprint Nextel, and the $1.3 billion transaction is expected to close in the second quarter.
UbiquiTel added just 3,800 net new subscribers during the first quarter, far fewer than the 10,000 to 12,000 subscribers that analysts had expected and way down from the 14,400 customers it gained in the same period last year. The customer figure also was down sequentially from the 13,600 subscribers that UbiquiTel added in the fourth quarter of 2005. The company ended the period with 451,700 customers, excluding resell subscribers.
UbiquiTel’s ARPU was stable at $55, the same ARPU figure the company reported in 2005’s first quarter and fourth quarter. Customer churn bumped up to 2.8 percent, compared with 2.6 percent in the same quarter of last year.
However, the operator’s net income more than doubled when compared with the first quarter of 2005, going from $2.5 million to $6.4 million. The performance would have been even better if not for $2.8 million in expenses related to UbiquiTel’s lawsuit against Sprint Nextel for violations of affiliate agreements.
Rural Cellular Corp. continued to bleed customers as its churn rate edged upward to 2.6 percent in the first quarter. But the company’s revenues were up by about 8 percent, with particular strength in roaming revenue, and it also increased its ARPU results.
RCC lost about 7,800 customers in the first quarter. The operator’s total customer base has fallen by roughly 100,000 customers between the first quarter of 2005 and the first quarter of 2006. RCC’s churn rate was up 0.2 percent from last year’s first quarter, and the company ended the first quarter with about 586,500 postpaid customers, 11,900 prepaid customers and nearly 99,400 wholesale customers.
RCC’s ARPU was $69, up around 19 percent from the same period last year. The company received $11.3 million in payments from the Universal Service Fund.
RCC’s network costs jumped about 20 percent due to operating multiple networks and the deployment of 187 new towers.
Dobson Communications Corp. managed to hold its postpaid subscriber base steady and even added 2,500 net new customers overall-a big step up from customer losses of about 28,000 subscribers in both the first and fourth quarters of 2005. Dobson also cut its churn rate from 2.43 percent in 2005’s first quarter to 2.08 percent in the first quarter of 2006, and bumped up its ARPU by about 9 percent to $46.76
“Our first-quarter results were generated in large part by continued improvements in network performance, increased productivity by our reorganized customer-care organization, the implementation of a well-focused marketing plan, and strong sales performance,” said Steve Dussek, president and chief executive officer of Dobson.
Dobson reduced its overall losses from more than $25 million in the first quarter of last year to about $13.3 million last quarter, including an income tax benefit of $5.3 million.
Leap Wireless International Inc., meanwhile, beat analysts’ expectations on customer numbers as it added more than 110,000 net customers during the first quarter. The figures reflected an increase of 140 percent from net additions of about 46,000 subscribers during last year’s first quarter.
“Our total net customer growth for the quarter included approximately 82,000 new subscribers in markets operating at the end of 2005, with approximately 28,000 additional new customers coming from the markets launched during the quarter,” said Doug Hutcheson, CEO and president of the company.
Leap ended the quarter with 1.78 million total customers and a customer churn rate of 3.3 percent-equal to its churn figure from the year-ago first quarter, and an improvement from the 4.1 percent churn that Leap posted in the fourth quarter of 2005.
Leap’s ARPU was $41.87, up nearly $3 from the $39.03 it posted during the year-ago period and $39.74 for the fourth-quarter of 2005. Analysts noted the growth highlighted the increasing draw of Leap’s high-end $45 per month service plan. The operator’s total consolidated revenue was up 17 percent compared with the first quarter of 2005 at $266.7 million, and comfortably ahead of analysts’ expected revenues of $246.3 million.
U.S. Cellular Corp. provided preliminary first-quarter results that reflected a decrease in the number of customers it signed up compared with the same quarter last year. However, the carrier kept its postpaid churn rate unchanged from the same quarter a year ago, at 1.5 percent.
U.S. Cellular recorded 151,000 new customers in the quarter, down from the 182,000 customers it signed up in the year-ago quarter. U.S. Cellular ended the first quarter with 5.6 million customers.
