Alltel posts robust Q2 ahead of acquisition

Alltel Corp. reported a strong quarter in which it saw its best-ever figures in wireless service revenue and churn-but profits were down 54% from the previous year’s second quarter due to 2006’s inclusion of profits from the company’s wireline division, which Alltel has since spun off.
The carrier, which has agreed to be acquired by two private equity companies, ended the quarter with more than 12.2 million customers. Alltel recorded postpaid net customer additions of 181,000 subscribers and said that prepaid customer additions were seasonally flat.
Total churn was at 1.67%, down from 1.91% in the previous year’s second quarter. Alltel pushed its postpaid churn down to 1.16%, from 1.47% in the second quarter of 2006. Both the total and postpaid churn numbers were the lowest that Alltel has ever recorded. The company also increased its average revenue per user, which was up $1.32 year-over-year to $54.10. Retail ARPU increased by 69 cents from the previous year’s second period, to $48.26.
Meanwhile, Alltel’s wireless service revenues increased 14% year-over-year to $1.97 billion for the quarter, a new record for the company.
Amidst the recent shakiness on Wall Street related to both the sub-prime mortgage market and corporate credit-particularly related to leveraged buy-outs by private equity companies-Alltel noted in its earnings release that the purchase by TPG Capital and Goldman Sachs Capital Partners is “not conditioned on financing” and that the two PE companies had received written commitments at the time of the deal from several financial institutions to back their obligations.
“Alltel has been given no reason to believe that these firms will not honor their obligations,” the carrier said, and added that the transaction is expected to close by the end of this year.