Alltel posts higher profit on wireless
Thu July 24, 2003 04:44 PM ET

By Yukari Iwatani

CHICAGO, July 24 (Reuters) - Rural telephone company Alltel Corp. AT.N on Thursday posted higher quarterly net earnings and sales for the second quarter as strong wireless results offset a weaker local telephone business.

The Little Rock, Arkansas-based company said its wireless business, which contributes nearly 60 percent of the company's revenue, added more customers than expected and increased profits by 17 percent, helped by a lower customer turnover and its efforts to increase higher-revenue subscriber customers.

Shares of Alltel closed up 29 cents at $46.80 on the New York Stock Exchange.

"A slight disappointment on the wireline side was more than offset by the very strong wireless performance," said Kevin Roe, president of Roe Equity Research.

Alltel said its local telephone business lost 26,000 lines, although it made up for some of the loss by gaining high-speed Internet customers.

"We are at least at parity, if not have a slight lead, in market share over cable companies in our markets (in the Internet business)," Kevin Beebe, president of Alltel's communications business, told Reuters.

Alltel, like other telecoms companies, has been hurt by a decrease in activated phone lines as customers swap second lines for high-speed Internet connections.

The wireless industry has also faced fierce competition, but Beebe said wireless pricing stabilized in the second-quarter, allowing operators to post strong customer growth and lower customer turnover as well as solid profits and revenue.

For the second quarter, Alltel said net income was $548.1 million, or $1.75 a diluted share, compared with $216.2 million, or 69 cents a share, a year earlier.

Net income included a $555 million pretax gain for the sale of its financial services unit in April.

Excluding that gain and other one-time items, the company posted earnings of 78 cents a share compared with 71 cents a year ago.

The company cut its long-term debt by $535 million by using proceeds from the sale of its financial services unit along with cash generated from business operations. It increased its cash and short-term investments by more than $440 million in the quarter.

Alltel said total revenue rose to $2.01 billion from $1.70 billion last year.

The company said its wireless business added 111,411 customers, including 30,413 gained through acquisitions. It finished the period with 7.87 million customers.

It increased its average monthly revenue per user by 2 percent and lowered turnover of its subscription customers to a more than three-year low.

ALLTEL Posts Higher Profit On Wireless