Regional carriers Triton PCS Holdings Inc., Dobson Communications Corp. and Rural Cellular Corp. showed their continued uneasy reliance on roaming traffic in first-quarter financials released last week. The regional players are trying to increase internally generated revenues to make up for decreasing roaming yields, which are expected to continue to decline in the wake of industry consolidation.
Triton PCS posted a 5-percent year-over-year increase in total revenues to $198 million, despite a more than 21-percent drop in roaming revenues from $42.8 million during first-quarter 2003 to $33.6 million this year. The carrier attributed the roaming decline to subscriber losses by majority roaming partners AT&T Wireless Services Inc. and rate plans that deterred customers from roaming off AWS’ network.
Triton PCS also reported total roaming minutes fell from 239 million minutes during the first quarter of 2003 to 223 million minutes this year, while the yield per minute slumped from 17.9 cents to 15.1 cents. Further impacting roaming revenues was a decrease in TDMA roaming revenues from Cingular Wireless L.L.C. related to the carrier’s overlay of its TDMA network with GSM technology.
The drop in total roaming minutes left Triton with an inbound-outbound roaming ratio of 1.67-to-1, which analysts noted was the carrier’s weakest level in more than three years. Analysts had expected Triton to post a slight increase in roaming minutes with roaming yield falling to around 15.5 cents.
Bolstering Triton’s total revenues were 25,257 net customer additions, which was a 20-percent dip from first-quarter 2003 results but well above analyst forecasts, and a slight increase in average revenue per user to $54.73.
Triton’s management said it expected second-quarter roaming results to improve based on AWS’ recent rate plan changes that now include no additional charges for roaming, Cingular’s recent emphasis on its no-roaming national plans and a recent agreement with T-Mobile USA Inc. that is expected to produce 15 million roaming minutes per month by the end of the year. Triton also has proactively modified its increasingly popular UnPlans to focus more usage on its network.
“We believe some of the negative roaming trends from [AWS] should abate through the remainder of 2004,” said Triton PCS Chairman and Chief Executive Officer Michael Kalogris. “The trends in roaming were not wholly unanticipated, rather the changes in the roaming landscape are occurring at a more rapid pace, and we are stepping up our efforts to adjust to these changed landscapes.”
The changed roaming landscape also impacted Rural Cellular. The company posted only a modest 5.2-percent increase in total revenues from $113.9 million during the first quarter of 2003 to $119.8 million this year, which was impacted by an 11.4-percent year-over-year drop in roaming revenues from $29.1 million to $25.7 million. Rural Cellular’s net losses also increased from $10.5 million last year, a loss of 87 cents per share, to $18.5 million this year, a loss of $1.51 per share.
The carrier’s management blamed the decrease in roaming revenues on the March 1 transfer of its Oregon RSA-4 property to AWS, and a decline in its outcollect roaming yield from 21 cents per minute during first-quarter 2003 to 19 cents per minute this year.
Excluding the market swap with AWS, Rural Cellular said it increased net subscriber additions from 6,333 last year to 9,101 this year. That combined with an increase in local service revenue per user from $40 during the first quarter of 2003 to $43 this year resulted in a 9.5-percent increase in service revenues.
A different impact was felt at Dobson, where roaming revenues actually increased year over year from $40.9 million to $42.1 million, despite roaming minutes of use that were in line with 2003 results at 303 million total roaming minutes and a blended yield of 14 cents per minute of use.
Dobson’s management noted AWS’ contribution to total roaming revenues dropped from 63 percent during the first quarter of 2003 to 56 percent this year, and AWS’ total roaming minutes of use dropped about 12 percent year over year.
Similar to Triton PCS’ roaming results, Dobson reported that Cingular, which combined with AWS represents approximately 90 percent of Dobson’s total roaming revenues, contributed an increasing share of roaming minutes from 27 percent last year to 35 percent this year. Dobson added that Cingular’s roaming MOUs also increased 30 percent year over year, and 85 percent of its GSM roaming traffic was generated by Cingular customers.
The increase in roaming revenue along with the acquisition of the previous American Cellular Corp. joint venture with AWS last year bolstered Dobson’s total revenues, which increased more than 81 percent from $128.9 million to $233.8 million, despite a drop in net customer additions from 11,800 subscribers during the first quarter of 2003 to a loss of 5,400 subscribers this year and a decline in ARPU from $42 to $41 during the same time frame. Dobson also posted a decline in net income from $18.1 million last year, a return of 20 cents per share, to a loss of $16.5 million this year, or a loss of 12 cents per share.
