UPDATED: Editor’s Note: With all of the domestic industry’s public, facilities-based operators having announced second quarter results we decided to provide a quick snapshot of how the quarter stacked up.
Verizon Wireless (106.3 million connections)
Quick facts: Posted 2.2 million net additions for the quarter, including 1.3 million direct postpaid and 890,000 through wholesale partners and “other” connections. Total churn for the quarter was 1.22% with postpaid churn of .89%. Direct ARPU up 1.9% year-over-year to $52.49, with postpaid data ARPU up 15.2% to $21.26. Total revenues up 10.2% to $17.3 billion, with data revenues up 22.2% to $5.8 billion. Smartphones constituted 36% of postpaid customer base. 2.3 million iPhones activated during the quarter, with 23% of those activations new to the carrier.
Quick react: Another dominating quarter for Verizon Wireless, which not only posted the strongest growth across the domestic market, but continues to be the prime destination for high-valued contract customers. With iPhone on board and expanding LTE-device lineup, the industry’s postpaid space looks set to be a monopoly.
AT&T Mobility (98.6 million connections)
Quick facts: Posted 1.1 million net additions during the quarter, including 331,000 postpaid net adds, 137,000 prepaid net adds, 379,000 connected devices and 248,000 reseller net additions. Customer churn increased year-over-year from 1.29% to 1.43% during the quarter, with postpaid churn up from 1.01% to 1.15%. ARPU was $63.87 during the quarter, with data ARPU up 16.6% year-over-year to $24.57. Total wireless revenues up 9.5% to $15.6 billion. Smartphones made up 70% of postpaid device sales with, including 3.6 million iPhone activations during the quarter with 24% new to the carrier and Android-powered devices accounting for 40% of smartphone sales.
Quick react: Taking Verizon Wireless out of the equation, not a bad quarter for AT&T Mobility with modest growth across all connection segments. Churn did tick up, which could be just a Verizon Wireless getting the iPhone bump, but industry leading ARPU and smartphone adoption shows the carrier remains a revenue generator. Oh yeah, they are also trying to acquire T-Mobile USA Inc.
Sprint Nextel Corp. (52 million connections)
Quick facts: Posted 1.1 million net additions during the quarter, including 674,000 direct prepaid, 519,000 net adds from wholesale and affiliates and loss of 101,000 direct postpaid. CDMA services counted 226,000 postpaid net additions, which were offset by the loss of 327,000 iDEN postpaid customers and 49,000 dual-network postpaid customers. Postpaid churn improved year-over-year from 1.85% to 1.75%, while prepaid churn improved from 5.61% to 4.14%. Postpaid ARPU increased, while prepaid ARPU remained stable resulting in total revenues growing from $8 billion in 2010 to $8.3 billion this year. Impact of higher subsidies tied to greater smartphone sales pushed net losses from $760 million in 2010 to $847 million this year.
Quick react: Strong quarter for No. 3, bolstered by its well developed prepaid and indirect channels. Postpaid net adds for CDMA network are encouraging, though iDEN overhang remains a drag. Bigger drag is continued operational costs of two networks, customer incentives and billions needed to update network. Moving in the right direction, though headwinds remain brisk.
T-Mobile USA Inc. (33.6 million connections)
Quick facts: Posted a loss of 50,000 customers during the quarter, including loss of 281,000 postpaid customers offset by a gain of 231,000 prepaid customers. Overall churn remained flat year-over-year at 3.4%, with postpaid churn up slightly to 2.4% and prepaid churn down 10 basis points to 6.7%. ARPU was down $1 to $46, with data services counting for $13.60 of that total. Total revenues dropped from $5.356 billion during second quarter of 2010 to $5.050 billion this year. CPGA was down $10 to $320, while CCPU remained steady at $23. CapEx of $688 million during the quarter, down from $749 million last year. Net income dropped from $404 million last year to $207 million this year.
Quick react: A real mixed quarter for T-Mobile USA. Glass is half full folks would say the carrier slowed customer defections, though those seeing the glass half empty would (rightly) say they are still losing too many customers. Churn remains an issue, while new rate plans seem to be taking a bite out of recurring revenues. Oh yeah, there is also that whole possibly being acquired thing.
MetroPCS Communications Inc. (9.1 million connections)
Quick facts: Posted 198,810 net customer additions, down 34% year-over-year. Customer churn was a major factor in the shortfall, increasing from 3.3% during second quarter of 2010 to 3.9% this year. ARPU increased from $39.84 to $40.49, helping push a 19% increase in total revenues to $1.2 billion for the quarter. CPGA increased 8.3% to $177.88, while CCPU increased 5.8% to $18.94. Net income remained flat at $74.7 million.
Quick react: Important customer metrics for MetroPCS business plan fell short during the quarter, with growth below estimates, churn increasing significantly and operating costs inching up. Smartphone push seems to have helped recurring revenues, but the downside of trying to compete in that space with a prepaid model seems tenuous.
Clearwire Corp. (7.6 million connections)
Quick facts: Posted 1.543 million net connections to its network during the quarter, more than double the 723,000 added last year. Nearly all new connections were from wholesale partners with direct retail through “Clear” brand contributing just 39,000 net additions. Direct customer churn increased from 3.2% last year to 3.9% this year, while wholesale churn dropped from 3% to 1.3%. Direct ARPU increased from $42.17 last year to $47.59 this year, while wholesale ARPU increased from $4.87 to $6.18. Overall revenues increased from $117 million last year to $293.7 million this year. Increased expenses pushed net losses up from $511 million last year to $911.6 million this year.
Quick react: Clearwire’s evolution from a direct provider of services to a wholesale operator continued. While virtually all operating metrics showed improvements, the carrier’s network issue remains front and center. Network scope is still limited and technology choice seems to be hindering attempts to attract new partners. Financial limitations have been going on for nearly a year, which seem to have handcuffed much needed expansion. LTE announcement could help break those bonds, but need for capital continues to cloud the picture.
Leap Wireless International Inc./Cricket (5.7 million connections)
Quick facts: Posted loss of 103,140 customers during the quarter due to a loss of 132,000 mobile broadband subscribers offsetting gain of 29,000 “voice” customers. Customer churn improved year-over-year from 5% to 4.2% offsetting an 8.8% drop in gross customer additions. Voice customer churn improved from 4.6% last year to 3.6% this year. ARPU jumped from $37.71 in 2010 to $40.15 this year, attributed to grea
ter smartphone adoption and accompanying higher rate-plan prices. Total revenues increased 14% to $760.5 million. CPGA increased 16.7% to $251, while CCPU increased 24% to $21.83. Net losses increased from $18.2 million in 2010 to $65.2 million this year.
Quick react: Customer losses continue to be a concern, especially as it seems to be coming from a drop in gross customer additions dropping faster than improved churn can bolster. While improved, those churn results still remain high with nearly half of customer base leaving the carrier every year. ARPU growth shows smartphone push seems to be working, but accompanying costs associated with that plan hitting the bottom line.
U.S. Cellular Corp. (5.644 million connections)
Quick facts: Posted loss of 70,000 customers from its network during the quarter, with a majority coming from direct postpaid customer base. Also reported that gross customer churn was down sequentially and year-over-year, which offset flat postpaid customer churn of 1.4%. ARPU continued to improve, hitting $48.27 during the quarter. Smartphones accounted for 39.6% of new device sales during the quarter. Total revenues increased 3% to just over $1 billion, while net income surged 81% to $73.9 million.
Quick react: U.S. Cellular continued to bleed customers during the second quarter as wireless growth slows and customers look for other operators. Over the past 12 months, U.S. Cellular has lost 181,000 customers, all coinciding with sequential drops in gross customer additions. While its customer base declines, recurring revenues continue to climb thanks to increase in smartphones on the network. Despite extensive marketing efforts and success around its “Belief” program, Q2 was another tough operational quarter for the carrier.
Atlantic Tele-Network Inc./Alltel (674,080 connections)
Quick facts: Posted a loss of 35,241 customers during the quarter, which was a 75% increase compared with the second quarter of 2010. The results were impacted by drop in gross customer additions and increase in postpaid customer churn to 2.42%. Blended churn improved from 3.85% to 3.73%. ARPU increased from $45.13 to $47.90, with postpaid ARPU growing to $54.57. Total revenues, including domestic, international and wireline operations, increased 17.6% to $193.8 million. Increased expense related to transitioning services and customers from Verizon Communications Inc. hit bottom line as net income dropped from $24.8 million to $1.8 million.
Quick react: Alltel’s full transition back into the mobile space appears just about complete, and in time to experience one of the most competitive environments for regional wireless operators. The loss of more than 125,000 customers over the past 12 months shows just how tough it has been for the carrier. Alltel’s postpaid operations continue to attract a stable amount of gross additions, though higher churn shows more are leaving. Prepaid segment showing slower growth and even greater churn. Increasing ARPU results and new operations platform should help Alltel stabilize expenses going forward, though competitive environment shows no sign of letting up.
Cincinnati Bell Wireless (487,300 connections)
Quick facts: Posted loss of 16,600 customers during the quarter, with two-thirds coming from postpaid. Impact felt from gross customer additions as customer churn remained stable year-over-year. Voice ARPU took a 7% hit, but was offset by 25% increase in data ARPU leaving total postpaid ARPU flat. Prepaid ARPU saw 6% growth to $27.71. Wireless revenues down 5% year-over-year to $69.7 million. Carrier added 1,000 postpaid smartphone connections during the quarter, with segment now representing 30% of postpaid customer base.
Quick react: Tough quarter all around for regional operator with large losses from postpaid base. Customer churn remained stable, though elevated, which shows fewer customers are seeking out Cincinnati Bell Wireless as their first destination for wireless services. Smartphones, which are currently the biggest attraction for carriers, look to be a growing segment for the carrier and with the right mix could help turn or at least stop customer defections. Overall results seem in line with what regional carriers are experiencing.
Ntelos Holdings Corp. (424,796 connections)
Quick facts: Posted a loss of 4,714 customers during the quarter, with a gain of 564 net postpaid customers offset by big drop in prepaid base. Results were slightly better than Q2 2010. Carrier did note that recently introduced unlimited prepaid plan was seeing strong traction. Customer churn of 3.3%, while postpaid ARPU inched up 1% to $56.90. Postpaid data services showed 24% year-over-year growth to $16.36. Despite the growth in recurring revenues, operating income dipped from $23.5 million last year to $21.3 million this year. Smartphones accounted for 64% of postpaid gross additions and represented 29% of postpaid customer base. Wireless CapEx increased year-over-year from $9.9 million to $13.1 million.
Quick react: Small fish in a big pond, Ntelos showed that competing in the mobile space remains a tough proposition. Managed to post gains in postpaid space, though prepaid defections dragged down overall results. New $45 unlimited rate plan for prepaid could help keep those looking at similar offerings from rivals. Customer churn remains big concern, though ARPU growth and strong sales of smartphones show positive attributes for postpaid operations. Increased CapEx spending shows carrier still focused on improving network quality and scope.
(Story updated with U.S. Cellular and Alltel Q2 results.)