Leap lowers outlook due to stiff competition, economy

Leap Wireless International Inc. lowered the number of new subscribers it expects to add this year as the carrier faces increased competition in the prepaid segment. Leap added 202,767 net subscribers in the second quarter, up 18% from the year-ago quarter, but also reported increased churn of 4.4%, citing increased competition and today’s sour economy. The carrier’s stock was down 21% on the news to $17.80.
The no-contract carrier posted a net loss of $61.2 million in the second quarter, compared to a loss of $24.6 million in the year-ago period, on revenues of $597.4 million, up 25.8% from second-quarter 2008 revenues of $474.9 million. Repayment on a $1.1 billion credit facility this month contributed to this quarter’s loss. The company also spent $224 million in capital expenses as it continues to build out its AWS spectrum expansion markets.
Average revenue per user was down 7% from last year, to $40.73. The carrier said it counts 4.54 million subscribers as of June 30, and expects to add 1.5 million customers this year. Previously the carrier said it would add more than 1.5 million subscribers. Leap also narrowed its capex for the year to between $650 million and $700 million.