Leap triples subscriber adds in Q1: Flat-rate carrier’s net loss hits $8.1M

Leap Wireless International Inc. nearly tripled its net customer additions during the first quarter of 2007 compared with the same period last year, landing more than 318,000 new users and bringing its customer base to more than 2.5 million.
Leap’s service revenues were up 51 percent year-over-year to $326.8 million, due in part to a 9% increase in average revenue per user as more customers adopted pricier service plans.
Doug Hutcheson, CEO and president of Leap, said that about two-thirds of the company’s customers are now on service plans of $45 or higher. Leap recorded ARPU of $45.52 for the quarter, up from $41.87 in the first period of 2006.
The flat-rate carrier’s churn rate was up slightly year-over-year from 3.3% to 3.4% for the first quarter.
The carrier reported a net loss of $8.1 million, a reverse of the $17.7 million profit it reported in the same quarter a year ago. The company said the loss was due to increased depreciation and amortization costs “associated with new market expansion and financing activities in 2006.” The company had reported a net loss of $39.4 million in the fourth quarter of 2006.
Leap CFO Amin Khalifa said that the slight hike in churn was “due primarily to a greater number of less-tenured customers who are more likely to churn, and an increase in customers who deactivated their prior service in connection with handset upgrades.”
Hutcheson said that the company planned to continue its progress in 2007 with “new service plans, new data offerings and enhanced market clusters, all aimed at increasing our market penetration and reducing churn.”
Leap said it expects to launch new markets by mid-year that will cover about 3 million more potential customers, bringing its total covered POPs to about 51 million. The company expects second-quarter customer additions to be weaker due to seasonality, but still predicts that it will improve upon its performance year-over-year with net adds between 125,000 and 175,000.