SAN DIEGO—Leap Wireless International Inc. continued to gain momentum during the third quarter, adding seven times as many customers as it did at this time last year and increasing its revenue by 25 percent over the same period. However, the company’s profits were affected by the costs of its speedy expansion, dropping 37 percent to $10 million.
Leap took in 161,000 net new subscribers during the third quarter, seven times as many as its 23,000 customer additions at this time last year. The results didn’t include the transfer of about 31,000 customers out of Leap’s network when the carrier sold its Toledo and Sandusky markets in July to Cleveland Unlimited Inc.
Leap launched four new markets during the quarter, and it surpassed the 2-million customer mark. Leap ended the third quarter with 1.967 million customers, then announced on Oct. 24 that it had hit the 2 million mark: a gain of about 33,000 customers in less than a month.
Doug Hutcheson, president and chief executive officer of Leap, said that the carrier “continues to see good uptake of our products and services, with our third-quarter growth alone approaching the customer activity we achieved in the first half of the year.”
Leap’s customer metrics improved as well. The company’s average revenue per user jumped $4.17 from the third quarter of 2005, to $44.39; about $1 of the move was credited to Leap’s introduction of a pay-in-advance option for customers. Leap cut its churn rate from 4.4 percent in 2005’s third quarter to 4.3 percent in 2006.
The company also said it expects a strong fourth quarter, with net adds between 160,000 and 260,000. Company executives said during a conference call with analysts that they expect continued strength in ARPU as the company continues to get benefits from the pay-in-advance service and from a favorable mix of higher-ARPU plans in new markets.
Leap also recently introduced a $50 unlimited price plan that includes the ability to roam between Cricket markets. The plan also includes unlimited use of the company’s new Web portal.
Leap’ stock closed before the announcement at $55.66, then jumped to $58.43 after the earnings news. In later trading, Leap’s stock fell to around $56.59 per share.
