Sprint PCS kicked off fourth-quarter customer results on a positive note last week, saying it added approximately 1 million subscribers to its PCS network in the quarter, including 390,000 direct additions and more than 610,000 additions from strategic partners.
Analyst expectations for Sprint PCS’ customer growth ranged from 350,000 to 550,000 net subscribers. During recent quarters, Sprint PCS had failed to top the 371,000 customers it added during the fourth quarter of 2002.
Churn for the fourth quarter is expected to be 2.7 percent, slightly lower than analyst predictions of 2.9 percent. For the full-year 2003, Sprint expects direct net subscriber additions to exceed 1.1 million. Total subscribers added to the PCS network are expected to be more than 2 million, bringing year-end subscribers on the PCS network to more than 20 million.
Shares of Sprint PCS were trading up at $6.11 in days following the news.
Accounting for part of the PCS network’s 610,000 additions was affiliate Alamosa Holdings Inc., which said net subscriber additions were 34,000 for the fourth quarter-more than double its additions during the third quarter. The company pointed to reduced churn and seasonal holiday demand for the increase.
Alamosa said total subscribers as of Dec. 31 stood at 727,000, up 4.9 percent from the previous quarter and 16.9 percent from a year ago. Churn was 2.5 percent, down from 2.9 percent last quarter and 3.4 percent in the year-ago quarter. Churn was 2.7 percent for the full-year 2003, also improved from 3.4 percent for the full-year 2002. Alamosa also provided guidance for its fixed-asset additions for 2004, expecting them to be between $50 million and $65 million.
The customer results were released on the heels of a $225 million debt offering, the proceeds of which it plans to use to repay its senior secured credit facility and for general corporate purposes.
Analysts reacted well to the news, with Raymond James and Associates Inc. raising its 12-month price target for Alamosa from $4.75 to $6.50. “Given the recent completion of the exchange offer and the solid sequential improvement in recently released 4Q ’03 operating statistics, we have become increasingly confident that Alamosa has gotten itself back on a growth track,” according to a research note from Raymond James. “Our increased confidence, which we believe the market will ultimately share, leads us to believe that a higher valuation multiple is warranted.”
Alamosa’s stock surpassed its previous 52-week high to trade at $4.98 per share following the news.
Nextel Communications Inc. reaffirmed its 2003 subscriber guidance, saying it expects to see net additions of 2.2 million subscribers for full-year 2003, or approximately 500,000 for the fourth quarter, in line with analyst predictions. The news led Nextel’s stock to a new 52-week high of $29.37 per share early last week.
Other carriers have yet to announce subscriber additions for last quarter, but analysts are optimistic. It is predicted the industry added 5.5 million total wireless customers during the fourth quarter, despite the implementation of wireless local number portability in late November. Verizon Wireless is expected to lead the pack with approximately 1.5 million new subscribers during the fourth quarter. Cingular Wireless L.L.C. and T-Mobile USA Inc. are likely to each add around 800,000 customers. Less clear are predictions for AT&T Wireless Services Inc., which range from 100,000 to 500,000 new subscribers for the quarter.
