Though diminishing in count, regional wireless operators continued to report firm financial results highlighting continued opportunities outside the urban corridors.
U.S. Cellular
U.S. Cellular Corp. reported $971.6 million in total revenues for the second quarter, a nearly 15% increase compared with the $846.1 million the carrier posted during the same quarter last year. Net income nearly tripled from $50 million last year, a return of 57 cents per share, to $147.6 million this year, a return of $1.67 per share.
The No. 6 carrier added 37,000 subscribers during the quarter, increasing its subscriber base to 6.01 million customers, marking a 5.4% increase year over year. The results were down from the 49,000 customers the carrier added during the second quarter of 2006.
Average revenue per user increased 8.3% to $50.42 and data revenues jumped 77.2% to $85.4 million from the year-ago period, the company reported. Data revenues now account for 9.4% of all service revenues.
The carrier said its post-pay churn rate including reseller customers was 1.9%; excluding resellers, the company said postpaid churn was 1.4%.
Leap Wireless
Leap Wireless International Inc. failed to meet analysts’ estimates for customer additions in the last quarter and its stock suffered dramatically because of it, plummeting more than 20%.
The carrier reported almost 127,000 customer additions to its Cricket-branded service, most of which came from new markets launched since 2006, and a churn rate of 4.3% during the second quarter.
Analysts categorically took the carrier to task for coming up shy of the 150,000-plus customer additions forecast for the quarter, and then turned up the speculation knob with predictions about the operator’s not-so-distant future.
Ric Prentiss, an analyst at Raymond James, noted that Leap’s decision to give next-year guidance about six months earlier than expected could hint heavily at its interest in spiking valuation prior to merger and acquisition discussions.
“We believe there is a window of opportunity for Leap and MetroPCS to agree on a merger” before their respective 700 MHz auction forms have to be filed this fall, he wrote. “We believe a merger would have a positive impact on net adds and churn reduction by vastly increasing national network coverage.”
Leap greatly enlarged its footprint and bought spectrum in markets that seem likely to fit into the carrier’s market clustering strategy, spending $710 million on 99 licenses in last year’s advanced wireless services spectrum auction.
It’s because of that recently acquired spectrum and assumed synergy with MetroPCS Communications Inc., which was an even higher bidder in the auction, that market watchers haven’t given up on the long-term viability of Leap’s business model. Both carriers offer similar flat-rate, unlimited calling services.
With the planned coverage expansion and launches of Auction 66 markets, Leap expects to cover an additional 20 million to 28 million potential customers by the end of 2008, bringing its total covered pops to around 73 million to 81 million.
Costs associated with equipment, servicing and interest expense charges on debt crippled the company’s bottom line during the quarter. The carrier reported $3.2 million in net income for the quarter, down from the $7.5 million it earned in the year-ago period, and said it experienced a 5% rise in ARPU. Its overall revenue rose 47% from the year-ago period to $393.2 million.
The carrier said it served almost 2.7 million customers as of June 30.
Dobson
Dobson Communications Corp., which recently announced plans to be acquired by AT&T Inc., posted a 15% jump in second-quarter revenues from $312.1 million in 2006 to $360.2 million this year. Net income also improved from a loss of $8.4 million in 2006, a loss of 5 cents per share, to a return of $16.1 million this year, a return of 9 cents per share.
The carrier’s strong financial results were boosted by an increase in net customer additions from 17,300 subscribers during the second quarter of 2006 to 41,700 subscribers this year. The subscriber growth was helped by an increase in reseller customers that surged from a loss of 4,200 non-direct customers in 2006 to a gain of 12,900 reseller customers this year.
ARPU also increased from $47.89 during the second quarter of 2006 to $52.15 this year, with data ARPU improving from $3.72 in 2006 to $6.09 this year.
Centennial
Regional wireless operator Centennial Communications Corp. said it added 15,500 wireless customers across its domestic and Puerto Rico operations during its fourth fiscal quarter that ended May 31, and added 69,500 customers for the full fiscal year. The quarterly growth was an improvement compared with the 13,500 customers the carrier added last year, while yearly growth dropped slightly from the 73,400 customers added during the previous fiscal year.
The carrier ended the fiscal year with 694,500 customers on its domestic network and 406,500 wireless customers in Puerto Rico.
ARPU including roaming dropped from $66 during the fourth fiscal quarter of 2006 to $64 this year, while yearly ARPU fell from $67 in 2006 to $66 this year. Customer churn improved for the quarter from 2.2% last year to 2% this year, while full year churn dropped from 2.5% in 2006 to 2.3% in 2007.
Centennial’s consolidated revenues increased modestly during the fourth quarter from $221.2 million in 2006 to $228.2 million this year, while yearly revenues surged from $865.1 million in 2006 to $911.9 million this year. Quarterly net income improved from $3.4 million in 2006, a return of 3 cents per share, to $5.2 million this year, a return of 4 cents per share. However, full-year income plunged from a return of $20.2 million in 2006, a return of 19 cents per share, to a loss of $31.6 million in 2007, a loss of 30 cents per share. The drop was attributed to an increase in net interest expenses for the year.
Centennial’s stock was trading down more than 7% after the news. RCR
Dan Meyer contributed to this report.
