Centennial Communications Corp.’s earnings tumbled in its second quarter, despite an increase in revenue and healthy growth in its U.S. wireless operations.
The carrier reported $8.2 million in income from continuing operations during the quarter, compared with $18.6 million for the same quarter a year ago. The year-ago quarter had included an after-tax gain of 9 cents per share due to Centennial’s sale of spectrum in the Midwest.
Revenue from its wireless operations totaled $235.6 million, which breaks down into $111 million from its U.S. operations and $124.6 million from Centennial’s Caribbean operations. Revenue grew 10 percent from the same quarter last year, and Centennial ended the quarter with 1.34 million total wireless subscribers, up from 1.11 million.
Revenue from Centennial’s U.S. operations was up 13 percent, with a 65-percent increase in roaming revenue. The carrier reported that the jump was due to increased GSM traffic. Centennial has been transitioning its customers from analog to GSM, and now has nearly 56 percent of its customers on GSM. The transition will “position us to aggressively introduce data services to our customers,” said Michael Small, chief executive officer of Centennial, during the company’s earnings conference call.
The company expects more growth in roaming revenues during fiscal 2006, but anticipates that roaming will be only a small percentage of its consolidated revenue in the future.
Centennial counted 614,100 total U.S. subscribers at the end of the quarter, including 48,200 wholesale customers. In the year-ago quarter, the carrier reported 564,900 customers and 20,000 wholesale customers. Centennial’s churn rate for prepaid and postpaid customers in the U.S. was 2.3 percent for the quarter.
Revenue from Centennial’s Caribbean operations increased 7 percent, but its average revenue per user dropped 22 percent to $42; the company cited the impact of prepaid subscriber growth in the Dominican Republic as a cause for the decline.
Several major changes in Centennial’s Caribbean operations-including network replacement and upgrades, a sales reorganization and a call center relocation-caused disruptions. However, the company said the bumps would position it for long-term growth and that it expected to see a “meaningful reduction” in churn during the fourth quarter of 2006. Caribbean churn rates were at 4.6 percent, compared to 4.3 percent for the same quarter last year.
“We continue to pursue a path of long-term leadership in each of our local markets, and are encouraged by the healthiest subscriber growth in nearly three years in our U.S. wireless business,” said Small.
The carrier estimated that it had $9 million in startup costs for building out its network in the Grand Rapids/Lansing, Mich., area, contiguous to existing markets. Small noted that Centennial plans to be careful about the amount of debt it carries and was not planning on any new major buildouts in the foreseeable future.
