Qwest Communications International Inc. reported a profitable third quarter with net income of $194 million, reversing a $144 million loss the company reported in the same quarter last year. Further, Qwest said the penetration rate of its service bundles increased 6 percent compared with a year ago.
The carrier said its third-quarter net income included a $92 million benefit from a tax-sharing settlement and severance charges of $43 million.
The company’s bundle penetration increased to 56 percent, up from 50 percent a year ago. Qwest reported that “sales of voice packages plus three or four products continue to drive significant growth” and that its average revenue per user is rising as well. Qwest’s ARPU jumped 7 percent from the same time last year, from $47 to $50.
“Customers are embracing our higher-value, higher-ARPU products that contribute to our revenue while our cost structure and investments remain focused and rational,” said Qwest chairman and chief executive officer Richard Notebaert.
However, wireless revenue was up just 3 percent compared to last year. Qwest added 4,000 wireless customers during the third quarter, ending the quarter with 781,000 wireless subscribers.
Independent telecom analyst Jeff Kagan described 2006 as “Qwest’s turn-around year. The recovery has taken years to get there, but this year the company became profitable and that is continuing this quarter.”
He noted that Qwest-which has a mobile virtual network operator relationship with Sprint Nextel Corp.-only offers wireless as part of its bundle, not as a stand-alone product.
Canadian telecom company Rogers Communications Inc. increased its wireless postpaid ARPU by more than 5 percent, citing data revenues for the boost. However, its net postpaid customers were down by more than 12 percent compared to the same period last year.
The carrier reported that the ARPU increase was due to a nearly 48-percent jump in data revenues, which now make up 10.5 percent of total wireless network revenue. Roaming and optional voice services also contributed.
Rogers’ wireless segment saw operating revenue increase more than 18 percent compared to the same period last year, climbing to about $1.1 billion. Wireless operating profit was up 47 percent year-over-year, to about $494 million.
The carrier added just over 200,000 net new subscribers; about 171,000 subscribers were postpaid, and nearly 32,000 customers were prepaid. Rogers’ gross additions were down nearly 7 percent, and net postpaid adds decreased by about 12 percent: from about 195,000 subscribers in 2005’s third quarter. But Rogers’ prepaid numbers boomed from 18,000 customers in the year-ago period.
Prepaid churn was up slightly, from 3.4 percent in 2005’s third quarter to 3.5 percent in 2006’s third quarter. Postpaid wireless churn was down from 1.5 percent in 2005’s third quarter to 1.3 percent in 2006. Rogers reported a wide difference in postpaid vs. prepaid ARPU: its postpaid customers posted $61.99 for ARPU, up from $58.87 a year ago. Meanwhile, prepaid ARPU was only $12.87, although that also was up more than 5 percent from the $12.25 recorded in the same period in 2005.
Rogers ended the quarter with about 6.5 million total wireless customers. The company credited promotional offers for its increase in prepaid customers, saying that it was trying to stem prepaid losses from earlier in the year.
SunCom struggles
Regional carrier SunCom Wireless Holdings Inc. posted mixed results for the third quarter, with revenues up, but still recording an overall loss and higher sequential churn.
Deactivations due to the carrier’s ongoing conversion of customers from its legacy TDMA network to its GSM network totaled almost 13,700 customers during the third quarter, up from less than 8,100 subscribers in the second quarter. The carrier said it transitioned more than 40,000 customers during the quarter.
SunCom’s churn rate for the quarter jumped from 2.2 percent in the second quarter of 2006 to 2.9 percent in the third. However, that figure is substantially lower than the 3.8 percent churn that the carrier reported during the third quarter of last year.
“Any time you require customers to change technology, it has a negative impact on your customer service support system … even when the outcome is positive-that is, converting subscribers to long-term contracts and replacing out-of-date handsets with newer versions,” said Bill Robinson, SunCom’s executive vice president of operations.
SunCom’s ARPU jumped from $52.89 in the second quarter of this year to $54.56 in the third quarter, due to higher access revenues, feature revenues and seasonal increases in usage and roaming charges. However, that ARPU figure was down slightly from the $54.60 that SunCom recorded in the third quarter of 2005. ARPU in SunCom’s U.S. operations was up about a penny, while ARPU from its Puerto Rico and U.S. Virgin Islands segment was down by 0.4 percent.
SunCom’s equipment costs were up as well for the quarter, to $38 million. The company said that the increase was due to higher customer gross additions and increased handset upgrades for retention programs. The increase in gross additions came from its Puerto Rico/Virgin Islands segment.
SunCom reported that its total revenues were up compared with the year-ago period, from $214.5 million in 2005’s third quarter to $219.1 million in 2006. The company still reported an overall loss of about $40 million, but substantially reduced that figure from the $117 million loss that SunCom reported at the same time last year.
