Verizon Wireless and AT&T Mobility continued to pummel Sprint Nextel Corp. in customer gains during the first quarter, but investors appeared encouraged by Sprint Nextel’s performance, which-in a back-handed sort-of compliment-was not as poor as had been expected.
Verizon Wireless fastest growing
Verizon Wireless again laid claim to the title of the industry’s fastest-growing wireless carrier, posting 1.7 million net customer additions during the first quarter, compared to 1.2 million from AT&T’s wireless division and 568,000 from Sprint Nextel. No. 4 carrier T-Mobile USA Inc. also is expected to post fewer than 1 million net additions.
In their ever-evolving quest to find
esoteric metrics in which they outdo each other, Verizon Wireless and AT&T Mobility touted their numbers on how many subscribers are data customers: 33.4 million for AT&T Mobility, with a growth rate of more than 30% year-over-year; and 36 million for Verizon Wireless, with 37.5% growth since the first quarter of 2006.
Verizon Wireless also noted that direct customer additions totaled 1.6 million subscribers for the quarter. The carrier ended the first three months of the year with 58.5 million direct customers on its network, which it claimed was the most of any domestic operator. Verizon Wireless counted 60.7 million total customers at the end of quarter, just short of AT&T Mobility’s 62.2 million customers.
Boosting Verizon Wireless’ strong growth was a 1.08% customer churn rate, which dropped from the 1.2% posted during the first quarter of 2006, and a 2.1% increase in gross customer additions to 3.6 million subscribers for the quarter. Comparatively, AT&T Mobility’s total churn rate stood at 1.7% and postpaid churn was 1.3%.
Average revenue per user for Verizon Wireless increased 4.2% from $48.67 during the first quarter of 2006 to $50.73 this year, but was flat sequentially. The carrier noted that data ARPU increased 54% year-over-year to $8.95, and that it had 36 million data customers at the end of the first quarter.
The strong ARPU growth helped push Verizon Wireless’ total revenues to $10.3 billion for the quarter, a 17% increase compared with the $8.8 billion posted during the first quarter of 2006. Operating income jumped 29% from $2.1 billion to $2.7 billion.
iDEN struggles continue
Meanwhile, Sprint Nextel performance wasn’t as bad as Wall Street had feared, despite continued losses of postpaid customers. Most analysts concluded that the company is close to turning a corner on its recent quarters of poor results, and the carrier’s stock ticked up 3% on the day it released results. The carrier gained almost 568,000 net new subscribers despite continuing overall losses in postpaid customers due to fleeing iDEN users.
Postpaid subs declined by 220,000 subscribers during the first quarter, reflecting a loss of about 1.1 million iDEN subscribers. According to Ken Hyers of Technology Business Research Inc., “Sprint Nextel is now better positioned and will see modest gains in postpaid growth and churn reduction in [the second quarter of 2007],” which Sprint Nextel execs have also maintained.
The first-quarter losses were mostly offset by gains in CDMA subscribers, according to Sprint Nextel, and reflected slowing losses of postpaid customers. The carrier lost 306,000 postpaid subscribers during the fourth quarter of 2006.
Sprint Nextel’s wholesale channel and Boost Mobile L.L.C. brand put the carrier in the black on net adds. Boost added 275,000 customers to bring its base to about 4.3 million customers. Wholesale channels, including mobile virtual network operators and affiliates, added 467,000 subscribers for a customer base of 6.8 million.
Sprint Nextel said it serves a total of 41.6 million postpaid subscribers, with the breakdown of 24.7 million on its CDMA network, 16.5 million on iDEN and 400,000 Powersource customers who use a dual-mode phones to access both networks.
Boost’s churn increased from 5.4% in the year-ago quarter to 7% due to “actions to remove inactive subscribers,” according to the carrier. Sprint Nextel’s postpaid churn was 2.3%, up from 2.1% in the first quarter of 2006 and flat sequentially.
Sprint Nextel’s postpaid average revenue per user stood at $59, a year-over-year decline of around 5% and sequential decline of about 2%. Most of the decline came from a 9% drop in iDEN ARPU, accompanied by a 1% ARPU drop for CDMA postpaid subscribers, the company reported.
The company posted a net loss for the quarter of $211 million, compared with net income of $419 million in first-quarter ’06.
