It was a good quarter for some regional providers of wireless service, with healthy growth and increasing average revenue per user.
Alltel Corp. posted strong second-quarter results with plusses and minuses in all the right places. The industry’s No. 5 carrier improved ARPU, substantially cut its overall and postpaid churn rate, and increased revenue from its wireless segment by 28 percent compared with the year-ago quarter.
The quarterly filing will be Alltel’s last as a consolidated company; the carrier spun off its wireline unit and merged those operations with landline company Valor Corp. earlier in the quarter.
Alltel added 146,000 net subscribers during the period, including 124,000 postpaid customers and 22,000 prepaid customers. The carrier also added around 112,000 customers through its acquisitions of First Cellular of Southern Illinois and Virginia Cellular. Comparatively, Alltel added about 54,000 net customers in the second quarter of 2005, although with acquisitions that number went up to about 266,000 subscribers. Alltel pushed its postpaid churn rate down 7 percent compared with the year-ago quarter, to 1.47 percent. Total churn was down by 4 percent to 1.91 percent for the second quarter of this year.
Alltel’s ARPU crept up by 4 percent year-over-year to $52.54; $3.26 of that was data revenue, a 61-percent increase. Data revenue now makes up more than 6 percent of Alltel’s ARPU.
Alltel’s wireless revenue clocked in at $1.9 billion, up 28 percent from the year-ago second quarter. Wireless service revenues were up 26 percent, and the company’s consolidated profits increased 7 percent to about $429 million.
Alltel ended the quarter with just over 11 million wireless customers.
Leap
Leap Wireless International Inc., meanwhile, did not meet its guidance on customer numbers, but impressed analysts with a company-record ARPU of $42.97.
Leap had expected to gain between 70,000 to 90,000 net new customers last quarter, but fell short of that goal and only landed about 58,000 subscribers. Company executives said that their net additions were impacted by T-Mobile USA Inc.’s aggressive response to their Houston market launch during the quarter. However, Leap Chief Executive Officer and President Doug Hutcheson added that Leap has “overcome some of the initial impediments to our Houston launch, and current customer growth is at or better than expected at this point in the launch.”
The carrier said it was accelerating some new market launches, that it was seeing surprisingly good take-up of new data services by its customers and that it plans to introduce a new WAP portal storefront for content purchases next quarter.
Leap’s churn rate fell from 3.9 percent in the second quarter of 2005 to 3.6 percent this quarter. The carrier reported total revenues of $268 million, up from $227 million in the second quarter of 2005. Net income for the quarter was $7.5 million, a substantial increase from the $1.1 million that the company reported in the year-ago period.
Leap ended the quarter with 1.8 million customers.
Qwest
Qwest Communications International Inc. landed in the black this quarter, up from a net loss in the same period last year.
Qwest said its positive figures were driven in particular by high-speed Internet access sales, growth in its wireless segment and its bundling tactics. Qwest’s Internet revenue was up 40 percent year-over-year, and its wireless revenue was up 8 percent compared with the year-ago quarter due to promotions and bundling, according to the company.
The company said its wireless ARPU increased 4 percent, from $50 a year ago to $52. Qwest counted 777,000 wireless customers as of June 30.
Bundling multiple products also continued to be a successful strategy for Qwest, and the company noted that “sales of voice packages plus three and four products continue to experience significant growth.” Qwest reported that its bundle penetration was 54 percent, up from 48 percent a year ago.
The company’s overall revenues were $3.5 billion for the quarter and its net income was $117 million. Its operating expenses dropped 6 percent to $3.1 billion in a quarter-over-quarter comparison.
