Nextel Communications Inc., which is in the process of merging with Sprint Corp., posted a 19-percent increase in total revenues during the fourth quarter from $3 billion in 2003 to $3.6 billion last year. Analysts were expecting the carrier to post around $3.5 billion in total revenues during the fourth quarter of 2004. Full-year revenues jumped more than 23 percent from $10.8 billion in 2003 to $13.4 billion last year.
Despite the year-over-year increase in revenues, Nextel’s fourth-quarter net income dropped from $631 million in 2003, or 55 cents per share, to $468 million last year, or 41 cents per share. The drop was due to increased operating expenses related to strong quarterly customer growth and a one-time gain on the sale of investments in 2003. Full-year net income more than doubled from $1.45 billion in 2003, or $1.34 per share, to $3 billion last year, or $2.62 per share.
Nextel also reported that fourth-quarter average revenue per user dropped from $70 in 2003 to $68 last year-though was still in line with analysts estimates-while customer churn dipped slightly from 1.5 percent during the fourth quarter of 2003 to 1.49 percent last year. The cost per gross addition also dropped from $485 during the fourth quarter of 2003 to $440 last year, while the cash cost per user increased 5.5 percent from $23.70 in 2003 to $25 last year.
Nextel previously reported customer growth results, including 595,000 direct net additions during the fourth quarter and 2.2 million direct customer additions for the full year. Nextel’s Boost Mobile subsidiary added another 360,000 subscribers during the fourth quarter and 755,000 subscribers for all of 2004. The carrier ended the year with 15 million direct subscribers and 1.2 million Boost customers.
Nextel’s management added that it expects to post 2.9 million net customer additions this year, including 1.9 million direct subscriber additions and 1 million Boost subscriber additions. The carrier also said it expects to spend $2.6 billion on capital expenditures this year not including approximately $900 million on its spectrum rebanding efforts.
