LITTLE ROCK, Ark.—Alltel Corp. posted solid third quarter revenues but its customer numbers didn’t quite meet analysts’ expectations, results that dropped the company’s stock price by more than 6 percent in Wall Street trading.
Alltel’s gross customer additions for the quarter jumped by 14 percent from the year-ago period, but it ended up with only 101,000 net new subscribers in the quarter—fewer than analysts had predicted.
Of the carrier’s 101,000 new subscribers, 75,000 were postpaid users. Alltel’s prepaid adds jumped to 26,000 customers, which the company said was an increase of almost 400 percent compared with the same quarter last year. Alltel ended the quarter with more than 11 million customers.
Alltel reported revenues of $12 billion, up 12 percent from the third quarter of 2005. The company’s net income increased by 11 percent to $402 million.
Alltel’s churn rate in the quarter was 2.18 percent, down from 2.37 percent in the third quarter of last year. In the carrier’s postpaid business, it recorded churn of 1.67 percent, a decline from the 1.92 percent Alltel reported in the year-ago period. However, Alltel’s average revenue per user crept downward about 1 percent, to $53.76.
This was the company’s first full quarter reporting as a wireless-only company; Alltel recently spun off its wireline business.
Independent telecom analyst Jeff Kagan said that Alltel’s performance this quarter “was good, but there were several areas of concern. The churn rate was high, and the customer adds were lower than expected.”
“It’s actually a pretty good story, but not as good as we expected,” Kagan concluded.
