Leap’s expansion pays off in new subscribers, but buildout costs drag on profits: Wireless provider scores 385,000 new customers in Q4

Leap Wireless International Inc.’s growth is going according to plan, but the carrier is paying for it, literally. In its fourth-quarter results, Leap reported operating income of $3.8 million, a fraction of the $17.9 million the carrier posted for fourth quarter of 2007. Leap attributed the revenue drop and its fourth-quarter loss of $54.8 million to the investments made in expanding its service in markets across the nation.
However, the carrier added 385,000 new customers during the fourth quarter, for a total of 3.84 million subscribers at the end of the year (the carrier recently announced its 4 millionth customer addition). About 133,000 of the carrier’s Q4 subscriber additions came from one of its new markets, while 173,000 adds were in existing Cricket markets.
Interestingly, Leap said the remaining 79,000 new customers in the fourth quarter were net broadband additions. The carrier said its Cricket Broadband Service was available in all of its markets by the end of last year.
Leap’s average revenue per user (ARPU) declined by 6.9% to $42.44 in the fourth quarter. Fourth-quarter churn stood at 3.8%, a slight improvement from the 4.2% churn reported in the third quarter of ’08.
Aside from the markets in Wisconsin and Michigan Cricket reached in late 2008, the carrier also recently began servicing Chicago.
Leap’s stock was up around 8% after the release of its Q4 numbers.