T-Mobile USA Inc. added 857,000 net subscribers to its network during the third quarter, numbers boosted by the carrier’s prepaid offering. The carrier had added 802,000 net subscribers during the third quarter of last year, but a higher percentage of them were signed to contracts.
About 35% of T-Mobile USA’s net additions during this year’s third quarter were prepaid, compared with just 4% in the third quarter of 2006 and 20% in the second quarter of this year. The wireless operator said that its July launch of FlexPay, which expanded pay-as-you-go options for prepaid customers as well as those on contracts, helped drive the growth of its prepaid service during the third quarter, particularly among FlexPay customers without contracts.
T-Mobile USA said that contract customers made up 84% of its subscriber base at the end the third quarter; the company had 27.7 million total customers on its network.
T-Mobile USA’s average revenue per user was up $1 year-over-year to $53, and it cut its postpaid churn rate from 2.3% in the third quarter of 2006 to 2%. The company’s overall churn rate was also down slightly, from 3% during the year-ago period to 2.9% this year. Pali Research analyst Walter Piecyk noted that the company’s churn remains high in relation to leading carriers AT&T Mobility and Verizon Wireless, due to the rising mix of prepaid customers.
Total revenues were nearly $5 billion, and the company reported profits of $526 million. That figure was down from the $1.79 billion profits in the third quarter of last year, which was boosted by a $1.5 billion income tax credit during that quarter.
With quarterly results from all four national carriers now in, AT&T Mobility led the pack with 2 million net customer additions and retained its place as the largest U.S. carrier, followed by Verizon Wireless with 1.6 million net additions. No. 4 carrier T-Mobile USA surpassed Sprint Nextel Corp. in terms of net additions for the quarter as the third-largest national carrier posted a loss of 60,000 customers.
U.S. Cellular
U.S. Cellular Corp. reported a strong third quarter, with ARPU increasing 10% and postpaid customer gains of about 73,000 subscribers.
However, the company missed Wall Street estimates on its earnings per share, sending its stock down sharply before rebounding.
As U.S. Cellular gained postpaid subscribers, its prepaid customer base declined by 21,000 subscribers-giving it total direct customer additions of 52,000 subscribers during the quarter. Reseller customers accounted for another 5,000 customer additions during the quarter. U.S. Cellular said about 95% of its retail customer base consists of postpaid customers. The company ended the third quarter with close to 6.1 million customers on its network.
The company trimmed its postpaid churn rate slightly, from 1.7% in the third quarter of 2006 to 1.6% this year; churn increased sequentially, however, from 1.4% in the second quarter of this year. U.S. Cellular’s data revenues jumped 66% year-over-year, fueling an ARPU boost to $52.71 during the third quarter.
“In addition, the popularity of our national and wide area calling plans helped to increase ARPU as more than half of our customer base has shifted to these high-value plans,” said John Rooney, president and CEO of U.S. Cellular. “We expect these trends to continue.”
The wireless operator’s service revenues were up 16% to nearly $1 billion, while its equipment sales revenues fell by about 8%. Operating income was up more than 30% to about $101 million, and its profits increased 77% year-over-year to $63.5 million.
The company raised its guidance for the full-year 2007. It now expects to gain between 375,000-425,000 net retail customer for the year, generate between $3.6 million and $3.7 million in service revenue, and earn operating income of between $410 million and $460 million.
Dobson
Meanwhile, regional carrier Dobson Communications Corp., which is in the process of being acquired by AT&T Mobility, said it added 49,100 new customers to its network during the third quarter. Most of the customers-35,400 of them-were through resellers, while the wireless operator added 8,200 postpaid subscribers and 5,500 prepaid customers. The company’s direct additions were down year-over-year; Dobson added 11,300 postpaid and 14,500 prepaid customers during the third quarter of 2006.
The company’s postpaid churn rate was 2.01% for the quarter, up from 1.95% at the same time last year.
However, Dobson’s ARPU was up year-over-year from $49.16 to $52.54, and it received a nice boost from data ARPU, which increased from $4.34 in the year-ago quarter to $7.03 this year. Roaming revenue was up 12% year-over-year to $98 million.
The company recorded net income of $24.9 million for the quarter, down slightly from the $25.9 million reported during the third quarter of 2006. Dobson noted that its net income included an income tax expense of about $29 million for the third quarter of 2007, compared with an income tax benefit of nearly $8 million during the same period of 2006.
