Cingular adds 657,000 customers in 3rd Q

[bobolito]

Cingular adds 657,000 customers
By Jeffry Bartash, CBS.MarketWatch.com
Last Update: 8:58 AM ET Oct. 20, 2004



WASHINGTON (CBS.MW) -- Cingular on Wednesday said it added the most customers in more than a year, helping to drive third-quarter sales 5 percent higher.

The company, a joint venture of BellSouth (BLS: news, chart, profile) and SBC Communications (SBC: news, chart, profile), added a net 657,000 subscribers to bring its total to 25.7 million. It was the strongest performance since the third quarter of 2003.

Yet to boost subscriber growth in the intensely competitive wireless business, Cingular had to spend more to sign them up. Operating expenses climbed 6.3 percent to $3.8 billion.

Sales, on the other hand, rose a lesser 4.9 percent -- to $4.3 billion from $4.06 billion.

The company said future results are likely to include AT&T Wireless (AWE: news, chart, profile), which Cingular is set to acquire. Federal regulators could grant approval of the $40 billion merger within a month.

"Soon, we expect to receive approvals and close the AT&T Wireless transaction," Cingular Chief Executive Stan Sigman said. "[O]ur number one focus will be giving customers great service and a seamless transition."

During the quarter, customer churn registered 2.8 percent, the same as the year-ago period but up from 2.7 percent in the prior quarter. Churn reflects how many customers switch or terminate service.

Monthly revenue per user, a key measure of industry success, fell 5.1 percent from the year-earlier period to $49.78. It was down a lesser 1.1 percent from the prior quarter.

The amount that Cingular customers pay per month for wireless service is among the lowest in the industry. The acquisition of AT&T Wireless will help boost that number because it caters to more business clients. Cingular has a greater share of the consumer market.

AT&T Wireless, however, has had problems holding on to customers amid technological snafus and other problems. Its churn rate reached 3.7 percent in the third quarter, a sharply higher rate of turnover than its competitors. Monthly revenue per use fell to $57.40 from $61.20 in the year-ago quarter.

By contrast, Sprint (FON: news, chart, profile) generated $63 in revenue per user each month during the third quarter while keeping churn down to 2.7 percent.

Industry leader Verizon Wireless, meanwhile, reported a company-low churn rate of 1.45 percent in the second quarter, with each user spending $50.80 per month on wireless service. Like Cingular, Verizon has a big consumer audience, but they tend not to move around as much.




http://www.marketwatch.com/news/yhoo...B78FFC2F9D1%7D

[bobolito]

More details in the official announcement:

http://biz.yahoo.com/prnews/041020/clw027_1.html

[Airb330]

Not too bad. With the great service, great plans, and great phone(prices too @ Best Buy, etc)...they should have been doing this all year. Cingular needs to hype up their coverage...in many areas CIngular is better or just as good as Verizon, and usually beats the pants off T-Mobile. I hear that ads are going to be aggressive after the merger!

[ehcruzan]

Originally Posted by bobolito

Monthly revenue per use fell to $57.40 from $61.20 in the year-ago quarter.

That's a sharp drop! Seems to indicate they're losing primarily high-end customers, however I think the bleeding will stop no more than 2 quarters after the merger.

[MOTOhooligan]

After the merger, once they have blended the two networks and can get back to the business of serving their customers, Cingular is going to be a force to be reckoned with, not that they aren't already but it's going to be interesting to watch. I suspect we'll be seeing a lot of Cingular vs. Verizon commercials, specials, etc... start the dueling banjos.

[bobolito]

Originally Posted by ehcruzan

That's a sharp drop! Seems to indicate they're losing primarily high-end customers, however I think the bleeding will stop no more than 2 quarters after the merger.

It also has to do with their sharp drop in prices. In order to slow down customer defections AWS had to slash prices everywhere and basically put themselves out for clearance. Many people simply have changed to these new plans which are much cheaper than last year's.

Remember how AT&T national plans were only on their network which was much poorer back then and did not have M2M, and charged a lot for roaming? Well, all those mistakes were slowly taken care of during 2004.

[ehcruzan]

Originally Posted by bobolito

It also has to do with their sharp drop in prices. In order to slow down customer defections AWS had to slash prices everywhere and basically put themselves out for clearance. Many people simply have changed to these new plans which are much cheaper than last year's.

Remember how AT&T national plans were only on their network which was much poorer back then and did not have M2M, and charged a lot for roaming? Well, all those mistakes were slowly taken care of during 2004.

I forgot all about that Bobolito. That definately would contribute to the drop.