Sprint Corp. wireless affiliate UbiquiTel Inc. posted 14,600 net customer additions during the second quarter, short of the 16,900 subscribers the carrier added during the second quarter of 2004 and below analysts’ estimates of around 16,500 net customer additions. UbiquiTel ended the quarter with 423,600 subscribers, including 120,600 reseller customers.
Customer churn improved from 2.7 percent during the second quarter of 2004 to 2.3 percent this year, which was better than estimates of 2.4 percent, while average revenue per user fell from $58 last year to $56 this year. UbiquiTel’s cost per gross addition surged nearly 10 percent from $471 during the second quarter of 2004 to $517 this year, while its cash cost per user dropped 7 percent from $43 last year to $40 this year.
Second-quarter revenues increased 19.7 percent from $88.7 million during 2004 to $106.4 million this year, but fell short of analysts’ estimates of $108 million. Net income improved from a loss of $6.9 million during the second quarter of 2004, or a loss of 7 cents per share, to a return of $4.4 million this year, or 4 cents per share.
UbiquiTel also reported $4.4 million in free cash flow during the second quarter, which was a 19-percent improvement compared with the $3.7 million it reported during the second quarter of 2004, but well below estimates of $12 million.
UbiquiTel’s stock was trading down 52 cents per share early Tuesday at $8.51 per share.
UbiquiTel announced an agreement with Sprint last week halting the affiliate’s attempts to seek injunctive or equitable relief from Sprint in connection with Sprint’s pending acquisition of Nextel Communications Inc. UbiquiTel filed a lawsuit against Sprint last month, claiming the pending acquisition would violate terms of UbiquiTel’s affiliate agreement.
As part of the agreement, Sprint has agreed to not use Nextel’s network or spectrum-including the G block 1.9 GHz spectrum Nextel is receiving from the FCC as part of its spectrum realignment plan-in UbiquiTel’s service areas to offer CDMA services. Sprint also said it will not offer dual-mode CDMA/iDEN handsets in UbiquiTel’s service areas unless the CDMA portion of the handset is programmed to use UbiquiTel’s network on a first-priority basis rather than using the iDEN network in its service areas.
The agreement also includes several provisions designed to protect UbiquiTel’s CDMA customer base from competing iDEN services in UbiquiTel’s service area. The terms include promotional material, billing and subscriber records, customer-care and migration services, and network performance reports.
