iPCS posts greater Q4 loss, inks new affiliate agreement with Sprint Nextel

Sprint Nextel Corp. affiliate iPCS Inc. provided further insight into its fourth quarter and full year 2007 operations. The carrier, which previously reported a steep drop in net customer additions for the quarter and flat growth for the year, reported a 6.7% increase in revenues for the quarter from $133 million in 2006 to $141.9 million last year. Full-year revenues jumped just over 9% from $492.4 million in 2006 to $538.1 million last year.
Net losses for the quarter improved from $12 million in 2006, a loss of 72 cents per share, to a loss of $4.1 million in 2007, a loss of 24 cents per share. For the year iPCS’ net losses increased from a loss of $46 million in 2006, a loss of $2.76 per share, to a loss of $69.3 million in 2007, a loss of $4.08 per share.
Reworking Sprint Nextel agreements
The carrier also reported amendments to its affiliate agreement with Sprint Nextel. The news coincided with the two companies dissolving some court claims against each other.
The amendments include new cost per gross user rates of $6.50, $6.15 and $5.85 for 2008, 2009 and 2010 if iPCS meets CDMA2000 1x EV-DO Revision A coverage milestones in the respective years. The rates are a drop from the current fees of $7.50, $7.09 and $6.81 per subscriber for 2007, 2008 and 2009.
The companies also agreed on a reciprocal voice roaming rate of 4 cents per minute for 2008 and 2009, dropping to 3.8 cents per minute in 2010. The most recent 2007 rate was at 4.03 cents per minute. Sprint Nextel also agreed to move iPCS to its Ensemble billing platform beginning this month.
Sprint Nextel and iPCS also agreed to proceed with the deployment of Q-Chat push-to-talk technology in iPCS’ markets, beginning with Grand Rapids, Mich. The Q-Chat service will allow PTT services to be processed between Sprint Nextel’s CDMA and iDEN networks.
Sprint Nextel also agreed to use “commercially reasonable efforts” to allow iPCS to offer Boost branded CDMA products and services in its markets. If the parties are unable to reach an agreement on the Boost offering, iPCS will be allowed to offer an independent prepaid plan in its markets. The Boost brand has been a major driver of customer growth for Sprint Nextel as its postpaid customer base has suffered significant setbacks.
“We are pleased to have reached an agreement that allows iPCS and Sprint Nextel to continue our successful partnership and continue to build long-term value for both companies,” said iPCS President and CEO Timothy Yager. “These amendments provide iPCS with improved subscriber economics and the ability to grow our subscriber base with more certainty as we plan our future business activities.”
The amended agreement does not impact Sprint Nextel’s appeal of a 2006 Illinois court case and final order that required the carrier to cease owning, operating and managing its iDEN network in iPCS’ wireless territories. That order has been stayed pending an appeal that is expected to be ruled on this year. Fellow affiliate Shenandoah Telecommunication Co. reached an agreement with Sprint Nextel in 2007 granting Shentel control over iDEN operations in its markets.
iPCS’ stock was trading up more than 5% mid-day at $19.50 per share.