Regional telecommunications operator Qwest Communications International Inc. pushed its way into positive earnings for the first time in several years, posting profits of $593 million for the year 2006.
The company had four consecutive quarters of positive net income, and reported fourth-quarter revenue totaling $3.5 billion and nearly $14 billion for the full year. Qwest had reported an overall loss of $779 million in 2005, and last reported a yearly profit in 2003.
The company said that its bundle penetration reached 57 percent by the end of last year, up from 51 percent at the end of 2005.
In wireless, Qwest’s revenues for the fourth quarter were up 2.2 percent from the year-ago period, to $141 million. Wireless full-year revenues clocked in at $557 million, an increase of 5.7 percent from 2005. Qwest gained an additional 20,000 wireless customers during the fourth quarter to end the year with a customer base of 801,000 subscribers. Wireless average revenue per user decreased slightly year-over-year, from $51 during the fourth quarter of 2005 to $50 during the same period in 2006.
However, Qwest’s overall ARPU from customers increased 6.8 percent from the year-ago period, to $51.25, the company reported. The company credited its success with bundling, as well as customer migration to higher-priced plans, for the increase. Oren Shaffer, Qwest’s CFO, told analysts during a conference call that the addition of wireless to a customer’s bundle reduced the likelihood of losing that customer by an average of 10 percent.
Qwest Chairman and CEO Richard Notebaert said that the company had made recent changes such as installing more than 100 kiosks in order to make it easier for customers to deal with the company.
“While initially, sales of this convenient channel were dominated by wireless transactions, today more than half of those sales made in those kiosks are for wireline products and services,” Notebaert said.
Qwest offers wireless service as a mobile virtual network operator using Sprint Nextel Corp.’s CDMA network.
Wireless bolstering Embarq
Meanwhile, Sprint Nextel’s local-line spinoff company, Embarq Corp., reported that it also is having success with bundling wireless service along with other telecom offers. Similar to Qwest, Embarq also offers wireless service as an MVNO using Sprint Nextel’s CDMA network.
Embarq said it added 24,000 wireless subscribers in the fourth quarter, which doubled its subscriber base to 48,000 customers as the year ended. Embarq’s consolidated net operating revenues stood at $6.5 billion for the year. The company was spun off from Sprint Nextel in May 2006. Net income for the quarter totaled $194 million. Landline voice made up the vast majority of the company’s revenues, accounting for $4.5 billion for the year, followed by data services ($716 million), high-speed Internet ($393 million) and wireless ($7 million).
