Several large wireless operators showed proof of continuing strength in the wireless industry, amid rumblings of a general slowdown in the economy. AT&T Wireless Services Inc., Sprint PCS, Verizon Wireless and Powertel Inc., all released fourth-quarter earnings reports last week showing positive results.
AT&T Wireless kicked off the week posting 865,000 net subscriber additions for the quarter, in line with analysts’ estimates of between 850,000 subscribers and 900,000 subscribers. This represented a 97-percent year-over-year increase, one of the highest among national wireless carriers.
For the year, AT&T Wireless added more than 2.5 million customers, bringing its total subscriber base to 15.2 million.
Company revenue rose more than 39 percent to $2.9 billion in the fourth quarter of 2000, compared with the same quarter in 1999, and increased 37 percent to $10.4 billion for 2000. Earnings per share for the year came in at 21 cents per share, well ahead of analysts’ predictions of a loss of 3 cents per share.
“AT&T Wireless continues to deliver growth on all fronts,” said John Zeglis, chairman and chief executive officer of AT&T Wireless Group. “We’re reporting a record number of net subscriber additions for the third straight quarter and our revenue growth was a strong 39 percent.”
Analysts reacted positively to AT&T Wireless’ earnings, with most maintaining their Buy ratings on the company’s stock and looking for strong future growth.
“We believe that this strong performance is proof that the American wireless industry is far from dead, and that AT&T Wireless is one of the best ideas for investors looking to participate in the torrid growth,” said Todd Bernier, wireless analysts for Morningstar.com.
AT&T Wireless also released wireless data numbers showing it has signed up more than 459,000 subscribers to its PocketNet wireless Internet service and short messaging services.
AT&T Wireless said it expected revenue growth of about 35 percent for 2001, with subscriber growth of approximately 20 percent.
Sprint PCS, often used as the barometer for the wireless industry, continued as the fastest-growing wireless operator, adding 1.25 million personal communications services customers during the fourth quarter, slightly below analysts expectations of between 1.3 million customer and 1.4 million customer additions. The company closed 2000 with 9.85 million wireless subscribers.
Sprint PCS reported $1.9 billion in revenue for the quarter, ahead of expectations of $1.8 billion. Average revenue per user came in at a surprisingly high $60, beating out analysts’ forecasts of between $58 and $59.
Earnings per share were reported at a loss of 53 cents per share for the quarter, in line with expectations, and a loss of $1.95 per share for the year, an improvement over the loss of 75 cents per share during the fourth quarter of 1999, and a loss of $2.73 per share for all of 1999.
Even with the company’s continued losses per share, analysts remain positive on Sprint PCS as a sound company and investment.
“As Sprint chalks up quarter after quarter of torrid subscriber growth, we grow increasingly confident of its position near the top of the wireless industry,” Bernier said in a Morningstar.com report. “We particularly like the fact that Sprint increased monthly average revenue per user by a couple of bucks from a year ago despite adding so many subscribers.”
Sprint said its expects 2001 subscriber growth to be comparable to 2000, but noted a slowdown in the economy may stall those forecasts. The company also said it expects to reduce its churn rate from nearly 3 percent at the end of 2000, to the mid 2-percent range by the end of this year.
Sprint PCS previously reported signing up more than 280,000 wireless data customers during the fourth quarter, bringing its total wireless data customer base to more than 1 million subscribers.
Verizon Wireless, which reported preliminary fourth-quarter results in early January, confirmed adding 1.2 million wireless customers during the period, bringing its total customer base to an industry high 27.5 million subscribers. The company said more than 99 percent of its net fourth-quarter additions were contract customers, up from 62 percent during the fourth quarter of 1999.
Verizon Wireless’ data services also gained steam, adding 250,000 customers during the quarter, bringing its total wireless data subscriber base to 750,000 customers.
The company reported $4.1 billion in revenue for the fourth quarter and $14.2 billion for the year, a 19-percent increase from 1999 results.
Verizon Communications, parent company of Verizon Wireless, said it still plans to go ahead with an initial public offering of Verizon Wireless stock some time this year, with some of the proceeds going toward the $8.8 billion Verizon Communications loaned to Verizon Wireless to pay for the licenses won during the Federal Communications Commissions auction of PCS licenses.
Powertel, which is scheduled to be acquired by Germany’s Deutsche Telekom, said it added 104,000 customers during the fourth quarter, below analysts expectations of 115,000 net additions. The company’s total customer base stood at 908,000 at the close of 2000.
Revenue for the quarter jumped from $84.7 million during the fourth quarter of 1999 to $130.7 million last year, with net losses attributed to shareholders dropping from a loss of $2.43 per share in 1999 to a loss of $2.14 per share during in 2000. Analysts had expected a loss of $1.89 per share according to data tracking firm First Call/Thomson Financial.
Only Nextel Communications Inc. and VoiceStream Wireless are left of the six national wireless operators to report fourth-quarter and year-end results. VoiceStream is scheduled to release numbers with the next few weeks, with Nextel following by the end of the month.
