SAN DIEGO-In the midst of a corporate restructuring, Leap Wireless International Inc. reported $155.2 million in total revenues for the third quarter, more than double the $66.7 million it posted for the same quarter last year. Net losses dropped from $160.7 million last year, a loss of $4.43 per share, to $143 million this year, a loss of $3.18 per share.
The carrier’s improving financial results came despite a drop in customer additions from 252,000 last year to 45,000 customer additions this year. The decrease in customer additions was in part due to an increase in customer churn from 3.2 percent last year to 4.5 percent this year. Average revenue per user increased slightly from $37 last year to $37.80 this year, while the cost per gross customer addition increased from $252 during the third quarter of 2001 to $312 this year.
Leap said it hopes to drive down customer churn and increase revenues with a number of recently introduced initiatives including a new billing cycle that will effectively eliminate its previous first month of free service with activation; a one-year contract for its recently launched Cricket Talks that included an early termination fee; and a $15 non-refundable activation fee for both new customers and those who switch service plans.
“During this challenging period in the industry and for our company, our Cricket service remains a high-quality, affordable wireless offering and we continue to lead the industry in landline replacement,” said Harvey White, chairman and chief executive officer of Leap Wireless. “We remain confident that we can, through our restructuring efforts, create a stronger Cricket company better positioned for the future that will continue to offer quality service to our customers and provide good opportunities for our employees.”
Leap also reported it was in default of its credit agreements at the end of the third quarter and had stopped paying interest and fees under those facilities. If the company’s creditors call in its debt, Leap said it would likely file for Chapter 11 bankruptcy protection.
