Despite an increase in the total amount of inventory, U.S. wireless carriers reduced their days of sales in inventory 13 percent from 48.6 days during the second quarter of this year to 42.5 days in the third quarter, according to a report from InfoTech Marketing.
The firm noted that although total inventory increased slightly to $1.6 billion between the second and third quarters of this year, the days of sales in inventory drop was due to a $500 million increase in the cost of equipment sales to $3.4 billion.
InfoTech found regional wireless operator Centennial Communications Corp. achieved the best efficiency during the third quarter with 23.4 days of sales in inventory, noting the carrier sold handsets costing $21.6 million during the third quarter while maintaining $5.6 million of inventory.
Leap Wireless International Inc. posted the second-best efficiency with 24.4 days of sales in inventory during the third quarter with $49.2 million in handsets sold and maintaining $13.3 million in inventory, followed by Cingular Wireless L.L.C. with 35.9 days of inventory, including $606 million in sales and $242 million in inventory.
The least-efficient carriers according to the report were Dobson Communications Corp. with 94.8 days of sales in inventory during the third quarter, including $17.4 million in sales and $18.4 million in inventory; U.S. Cellular Corp. with 66.9 days of sales in inventory, including $53.4 million in sales and $39.7 million in inventory; and Triton PCS Holdings Inc. with 66.5 days of sales in inventory, including $25.8 million in sales and $19.1 million in inventory.
InfoTech President Tim Walters noted that greater inventory control increases net income for carriers through reduced interest expense, and it increases cash flow.
“Opportunities still exist to free significantly more cash flow,” Walters explained. “Many carriers continue well above the industry average. Attaining 30 days of inventory would generate over $470 million in cash flow to the industry. If the carriers with over 40 days of inventory get to just 40 days, they would produce $138 million of industry cash flow.”
