Nextel Communications Inc. said it added 810,000 customers during the first quarter of this year, including 496,000 customers through Nextel-branded services and 314,000 customers to its Boost Mobile prepaid offering. Analysts were expecting Nextel to add between 450,000 and 500,000 direct subscribers during the quarter, which was also in line with the 474,000 direct customers the carrier added during the first quarter of 2004.
Nextel ended the quarter with 17 million total subscribers on its network, including 15.5 million direct Nextel customers and 1.5 million Boost Mobile subscribers.
The carrier’s branded service also posted a year-over-year improvement in customer churn from 1.7 percent during the first quarter of 2004 to 1.5 percent this year, while average revenue per user dropped from $69 last year to $67 this year. Analysts were expecting the carrier to post customer churn of between 1.5 percent and 1.6 percent and ARPU of between $67 and $68.
Nextel also reported operational metrics for Boost Mobile for the first time, including 5 percent customer churn and $41 in ARPU during the first quarter of this year. Boost’s customer churn results were comparable with other prepaid offerings, while the ARPU results were nearly double traditional prepaid results.
Nextel’s total revenues jumped more than 16 percent from $3.1 billion during the first quarter of 2004 to $3.6 billion this year. Despite the increase, net income dropped slightly from $593 million during the first quarter of 2004 to $589 million this year, though earnings per diluted share remained stable at 52 cents. The drop was attributed to a $4 million increase in mandatory stock dividends and accretion.
Nextel also noted that it spent $86 million during the first quarter in preparation for its spectrum rebanding efforts in the 800 MHz spectrum bands. The carrier has previously stated that the rebanding efforts could total more than $3 billion.
Nextel’s management also said that its pending merger with Sprint Corp. was still on track to close by the end of the year, and the carrier reaffirmed its previous guidance for 2005 that included 2.9 million net customer additions and $1.75 in adjusted earnings per share.
Nextel’s stock was trading down just more than 2 percent early Thursday at $28.39 per share.
