With a handful of operators yet to post fourth-quarter and full-year 2004 results, the wireless industry is well on its way to reporting one of the highest customer growth quarters-and years-in history. That potential was bolstered last week by three of the nation’s fastest-growing operators-Cingular Wireless L.L.C., Verizon Wireless and T-Mobile USA Inc.-posting a combined 4.5 million subscriber additions during the fourth quarter and setting the industry up to surpass more than 20 million customer additions for the year.
Cingular opened up the reporting last week with fourth-quarter results that surpassed even the most optimistic predictions. The carrier, which became the nation’s largest wireless operator last October following its acquisition of AT&T Wireless Services Inc., reported 1.8 million net additions on a pro-forma basis during the fourth quarter and ended 2004 with more than 49.1 million total subscribers on its network.
Cingular’s results included AWS’ first 25 days of October prior to the acquisition’s closing and net additions from other acquired properties and excluded results from markets where Cingular has agreed to divest pursuant to its acquisition of AWS.
Cingular noted that the strong customer growth was more than double the 736,000 pro-forma net customer additions posted during the fourth quarter of 2003. Excluding pro-forma results, Cingular said it added 1.7 million net customers during the fourth quarter of last year, which was more than double the 642,000 subscribers the carrier added during the fourth quarter of 2003.
Industry analysts were expecting Cingular to post around 1 million pro-forma net additions during the quarter.
Full-year customer growth excluding AWS increased from 2.1 million subscribers in 2003 to 3.4 million customers last year. The AWS acquisition added another 21.7 million customers to Cingular’s customer base.
Bolstering the carrier’s customer growth were a reported 5.7 million pro-forma gross customer additions during the fourth quarter of 2004 and a drop in customer churn to 2.6 percent on a pro-forma basis. Cingular posted a 2.8-percent churn rate during the third quarter of this year, while AWS posted a 3.7-percent churn rate ahead of its acquisition by Cingular.
“In addition to outstanding volumes, I am particularly pleased that we have moved churn in the right direction right out of the gate,” said Stan Sigman, Cingular president and chief executive officer. “And I am very confident in our ability to deliver continued solid progress in both churn and margins as we move forward.”
Verizon Wireless, which had led the industry in customer growth since the second quarter of 2003, posted nearly 1.7 million net customer additions during the final three months of 2004. The carrier noted the fourth-quarter results were a company record and the third consecutive quarter in which the operator posted a new quarterly record.
For the full year, Verizon Wireless added nearly 6.3 million subscribers-compared with 5 million in 2003-ending 2004 with 43.8 million total customers.
Analysts noted that Verizon Wireless surpassed most forecasts of 1.6 million net customer additions during the quarter despite a drop in gross customer adds that was offset by a decrease in customer churn from 1.7 percent in 2003 to 1.4 percent last year. Full-year customer churn dropped from 1.8 percent in 2003 to 1.5 percent last year.
T-Mobile USA, which has trailed only Verizon Wireless in customer additions over the past several quarters, said it added 1.019 million net customers during the fourth quarter of last year, which was just ahead of the 1.015 million subscribers the carrier added during the fourth quarter of 2003 and in line with analysts’ estimates. Boosting the carrier’s growth was a drop in customer churn from 3.2 percent during the fourth quarter of 2003 to 3.1 percent last year.
The strong fourth-quarter growth propelled the carrier’s full-year subscriber additions to 4.19 million customers, which was nearly 1 million subscribers more than T-Mobile USA added in 2003, pushing the carrier’s total customer base at the end of 2004 to 17.3 million subscribers. T-Mobile USA added that full-year customer churn dropped from 3.1 percent in 2003 to 3 percent last year.
When combined with the nearly 750,000 net customer additions already reported by Nextel Communications Inc. and Alltel Corp., the wireless industry has already surpassed 5 million net additions for the quarter. Analyst firm SG Cowen & Co. noted the results marked the fifth consecutive quarter in which the wireless industry has posted more than 5 million new wireless subscribers.
The industry is still waiting for fourth-quarter results from nationwide operator Sprint PCS, which is expected to post between 400,000 and 500,000 net subscriber additions this week, and regional operators and resellers that could add another 1 million customers to the count.
If those operators meet forecasts, the industry would come close to the record 6.5 million customers added during the fourth quarter of 2000, according to CTIA statistics, as well as match the 21.5 million total subscribers added that same year.
