Leap shows Q4 promise

Leap Wireless International Inc. LEAP), desperate for a positive spin following two disastrous quarters, released preliminary fourth quarter operational results highlighted by growth in its customer base and positive trends in customer churn.
The regional operator said it added 435,000 customers to its network during the fourth quarter, comprised of 115,000 direct customer additions and 320,000 added through the closing of its acquisition of Pocket Communications. For its direct net adds, Leap noted they included 162,000 voice subscribers and the loss of 48,000 customers from its broadband service.
The growth was down significantly from the 298,000 customers Leap added during the final three months of 2009 that included 229,000 voice customers and 69,000 mobile broadband subscribers. That drop came despite a dramatic improvement in customer churn that fell from 4.7% during the fourth quarter of 2009 to 4% in 2010. However, the fourth quarter results were a positive sign following the loss of 312,000 customers during the second and third quarters of this year, quarters that have traditionally been troubling for the carrier.
Speaking at the Citi 21st Annual Global Entertainment Media & Telecommunications Conference in Phoenix yesterday, Leap’ CFO Walter Berger noted that the carrier was seeing strong reaction to its recently launched smart phone initiatives. Berger noted that the carrier sold 400,000 smart phones during the fourth quarter and that 9% of its customer base was using those devices. The number is significant as smart phones require a rate plan starting at $55 per month.
The influence of smart phones has also shown up on Leap’ bottom line with Berger noting that average revenue per user increased $5 during December.
While smart phones appear to be drawing positive buzz for Leap, the carrier’s mobile broadband offering looks to be stagnating. After jumping out with strong growth following its launch, the carrier was forced to adjust pricing models in the middle of last year that appeared to cut the legs out of its lure to consumers. The service previously offered customers either 5 gigabytes of data transmission for $40 or 10 GB for $50 and marketed as a wired broadband replacement for consumers looking to cut the cord. The service has since been adjusted to provide 2.5 GB for $40, 5 GB for $50 or 7.5 GB for $60 per month.
Leap noted last year that changes were made to its pricing structure to handle possible capacity constraints on its network due to the flood of both mobile broadband users as well as the growing influence of data-hungry smart phones.
Berger added that Leap would be re-evaluating its mobile broadband plans during the first quarter.