NEW YORK-Omnipoint Corp., Bethesda, Md., reported year-end results that showed increased subscribers, revenues and losses.
In related developments, Bradley Sparks, chief financial officer, said during a Feb. 26 teleconference that the company had secured additional borrowing capabilities totaling $1.45 billion, more than enough for its 1998 capital requirements. Much of that will be used in the ongoing buildout of its personal communications services subsidiary, Omnipoint Communications Services L.L.C., Cedar Knolls, N.J.
Douglas Smith, chairman, chief executive officer and president, also announced that Omnipoint Technologies Inc., Colorado Springs, Colo., “has implemented [Interim Standard] 661, which will be used for wireless local loop service in the New York [major trading area].”There are 40 cell sites up and in the testing stage … We will more than meet the expectations everyone had.”
Omnipoint Corp. secured Federal Communications Commission PCS licenses at a discount. The FCC granted the company a pioneer’s preference in exchange for Omnipoint’s pledge to research and deploy in its network IS-661, a hybrid of Code Division Multiple Access and Global System for Mobile communications technologies.
Smith said the Colorado technology subsidiary also has entered into strategic relationships with equipment manufacturers to develop WLL products based on IS-661.
George Schmitt, president of Omnipoint Communications, said the PCS carrier will open its Boston and Miami markets for full-scale commercial service later this quarter. The Detroit network could be in commercial operation by early next year.
“At the end of 1997, we had 30 million pops covered or under construction and were marketing to more than 16 million … We will cover approximately 50 million pops and market to 40 million by the end of this year,” Schmitt said.
Because it uses GSM technology-which has 70 million subscribers worldwide today-and because it will soon have networks covering five of the country’s largest cities, Smith said Omnipoint “is an attractive candidate for the strategic partnering decisions we’ve been having.
“For legal reasons, we can only say they continue, that we are talking to more than one party, and there are issues involving third parties, which inject an element of unpredictability into the negotiations.”
Omnipoint Communications closed its fiscal year Dec. 31 with 141,000 customers, of which 61,000 net additions came on board during the fourth quarter. Average monthly revenue per subscriber was $56 for the year and $59 for the last quarter, Schmitt said.
Customer-acquisition costs, which were about $520 during the last quarter, should dip below $500 this year, Schmitt said. Smith, however, went so far as to say he expected customer-acquisition costs to dip below $400 by year-end, largely because Omnipoint is now getting wholesale handset prices in the range of $180 per unit.
Omnipoint Corp. posted total revenue last year of $52 million, with $23.7 million of this gained in the fourth quarter. By comparison, the company posted only $531,000 in revenues during all of 1996.
Of the 1997 total revenues, $42.4 million were derived from Omnipoint’s PCS carrier and $9.6 million from its technology subsidiary.
Omnipoint Corp. reported a loss for 1997 of $321 million, or $6.23 per share. This loss includes $8 million in inventory write-downs to reflect lower handset replacement costs and a $6.6 million charge for early repayment of and subsequent replacement of vendor debt at better rates for the New York MTA.
