A trio of wireless carriers released second-quarter results last week showing ongoing strength of the industry despite the continued slowdown in the general economy.
Alltel Corp.’s reliance on its wireless operations increased during the second quarter of this year as the country’s sixth-largest wireless operator’s wireless revenue of $965 million made up nearly two-thirds of the company’s $1.5 billion in total revenue for the quarter.
The carrier’s wireless revenue was driven by 113,000 net customer additions, a 40-percent increase compared with last year’s 81,000 net additions. Analysts were expecting customer additions of around 105,000 for the quarter. Alltel ended the quarter with 6.4 million wireless customers, a 13.1-percent penetration rate in its markets.
“Our new customers are driving revenue growth as they sign up for our Total and Regional Freedom calling plans,” said Joe Ford, chairman and chief executive officer of Alltel. “Alltel is increasing revenue per unit with these profitable national and expanded regional calling plans.”
While customer additions were strong, those customers spent less and cost more to acquire. Average revenue per user dropped from $51.27 last year to $47.56 this year, with the cost to acquire new customers rising from $318 to $335.
Alltel said it expects third-quarter earnings will come in on the lower end of expectations, with wireless revenue of $940 million and net customer additions of between 105,000 and 125,000 subscribers.
Alamosa Holdings Inc. posted preliminary results last week for its second quarter, showing an 82-percent increase in revenue from the first quarter to $83.5 million. The Sprint PCS affiliate broke down second-quarter revenue to include $53.5 million in subscriber revenue, $24.2 million in inbound roaming and $6 million in product sales. Alamosa also narrowed its earnings before interest, taxes, depreciation and amortization loss from $16.7 million during the first quarter to $9.1 million during the second quarter.
Customer additions for the quarter totaled 54,000, bringing the carrier’s customer base to 316,000 subscribers. Customer churn dropped from 2.6 percent during the first quarter to 2.4 percent.
“We are very pleased with our second-quarter net subscriber additions, low churn rate and EBITDA results,” said David Sharbutt, CEO of Alamosa. “This serves to demonstrate the effectiveness of our sales and marketing organization and the attractiveness of the markets in our licensed territory from a competitive standpoint.”
Alamosa plans to announce full second-quarter results this week.
Also posting results last week was Price Communications Corp., which reported its wireless subsidiary revenue dropped from $65.1 million during the second quarter of 2000, to $61.7 million this year. The carrier blamed the drop on the loss of roaming traffic in its markets, combined with overall lower roaming rates. In addition, Price said it had not increased its capital expenditures to build new cell sites and combat new competitors due to its pending merger with Verizon Wireless and the planned conversion from TDMA to CDMA.
With the increasing competition in its markets, Price added 15,149 net customers during the quarter, bringing its subscriber base to 557,000 customers. The carrier said net additions were negatively impacted by its weeding out of non-revenue-producing analog prepaid subscribers. Customer churn fell from 2.3 percent during the first quarter to 2 percent.
While the industry as a whole has turned in first-half results showing a strong resistance to the current economic slowdown, the real test lies ahead as carriers plow through the third-quarter dog days of summer before hitting the usually strong year-end rush.
