Following up on its pre-release of fourth quarter results last month, Leap Wireless rolled out the rest of the numbers showing improved financial results to go along with positive operational news.
Despite the results coming in just ahead of most estimates, Leap’s (LEAP) stock was trading down more than 3% in early Friday trading having lost more than 9% last month following the release of select results.
Leap posted an 8.4% year-over-year increase in revenues for the fourth quarter, rising from $708 million in 2010 to $767.4 million last year. Net losses also improved from a loss of $249.4 million in 2010 to a loss of $84.4 million last year.
For the full year, revenues increased 13.9% to $3.071 billion in 2011, while net losses improved from a loss of $872 million in 2010 to a loss of $314.6 million in 2011.
Leap added more details to previously announced customer results, reporting a 66.5% increase in net customer additions for the fourth quarter, surging from 107,443 net additions in 2010 to 178,889 net customer additions last year. For the full year Leap posted a 72.2% increase in customer growth from 241,546 net customer additions for all of 2010 to 415,834 net customer additions in 2011. Leap ended 2011 with just over 5.9 million customers on its network.
Leap had previously reported that during the final three months of 2011 it added 65,000 customers to its network that were located outside of its own network operations. This is possible through the extensive roaming agreement the carrier signed with Sprint Nextel as well as increased distribution channels. Analysts appear somewhat concerned about this mobile virtual network operator strategy, though Leap remains committed to the plan.
Leap also reported that more than 500,000 customers had signed up to its Muve music offering, that requires a minimum rate plan of $55 per month. Leap also reported that 60% of new device sales during the fourth quarter were of either smartphones or Muve-enable devices, both of which require premium priced rate plans.
The improved quarterly customer growth was due to both an increase in both gross customer additions, which grew 12.1% year-over-year, and a slight dip in customer churn from 4% to 3.9%. Leap’s management did note that voice-only churn was up slightly year-over-year due to some operational issues.
Helping to boost financials was a 10.4% increase in average revenue per user to $42.09 during the fourth quarter of 2011 that along with its robust customer growth offset a 3.2% increase in cash cost per user ($22.46) and a 13.9% increase in the cost per gross addition ($238).
For 2011, Leap said it spent $441.7 million on capital expenditures. For 2012, Leap said it plans to spend between $600 million and $650 million on capital expenditures in 2012, including plans to launch LTE services covering approximately 25 million potential customers this year. The carrier’s legacy CDMA network covered approximately 95 million pops at the end of 2011.
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