SAN DIEGO-Leap Wireless International Inc. posted-stronger-than-expected third-quarter financial results, which were bolstered by solid customer growth and improved customer revenues.
The carrier, which offers its flat-rate Cricket service in 37 markets across the country, reported an 11.4-percent increase in revenues during the third quarter, from $206.9 million in 2004 to $230.5 million this year. The robust growth was propelled by Leap’s previously reported improvement in customer growth from a loss of 8,000 subscribers during the third quarter of 2004 to a gain of 23,000 customers this year and an 8.8-percent jump in average revenue per user from $36.97 last year to $40.22 this year.
Analysts were expecting the carrier to add around 40,000 customers during the third quarter, but Leap’s reported 4.4-percent customer churn was significantly higher than the 3.9 percent it reported last year, though down slightly from the 4.5-percent churn posted during third-quarter 2004. Leap also previously reported that gross customer additions increased from 200,000 subscribers during the third quarter of 2004 to 234,000 subscribers this year.
Leap also noted that its third-quarter customer growth excluded the transfer of 19,000 subscribers related to the sale of its Michigan operations to Verizon Wireless.
Leap’s focus on cost controls was evident in its industry-leading $142 cost per gross addition result for the third quarter, which was in line with the $141 the carrier posted last year. Leap noted that cash cost per user ticked up from $18.38 during the third quarter of 2004 to $19.52 this year.
The carrier’s net income plunged from a return of $959.4 million during the third quarter of 2004, a return of $16.36 per share, to a loss of $4.1 million this year, or a loss of 13 cents per share. The third-quarter 2004 results were tainted by a $963.2 million reorganization item that Leap said reflected the net impact of its “fresh-start” reporting related to its emergence from bankruptcy protection last year. Without the one-time item, Leap would have reported a $5.9 million net loss for the third quarter of 2004.
