1st Quarter 2006 Carrier Report Discussion

[bobolito]

Cingular Swings to Profit in First Quarter


By HARRY R. WEBER, AP Business Writer
1 hour, 14 minutes ago



Cingular Wireless LLC, the nation's largest cell phone provider, reported Wednesday that it swung to a profit in the first quarter on a 9 percent increase in revenue.

The Atlanta-based company said it earned $354 million for the three months ending March 31, compared to a loss of $240 million in the same period a year ago.

Revenue rose to $8.98 billion, compared to $8.23 billion recorded in the same period a year ago.

The company said it ended the first quarter with 55.8 million subscribers. It said it had 1.7 million net subscriber additions in the quarter.

Average monthly revenue per user declined 2.3 percent in the fourth quarter to $48.48, compared to $49.60 in the same period a year ago. But monthly churn — the rate at which customers switch to other providers — dropped to 1.9 percent, compared to 2.2 percent in the year-ago period.

Operating expenses in the first quarter totaled $8.2 billion.

Cingular is a joint venture of Atlanta-based BellSouth Corp. and San Antonio-based AT&T Inc., the renamed SBC Communications Inc. Cingular's name is expected to be phased out if AT&T's proposed $67 billion purchase of BellSouth is approved. The deal is expected to close in 2007.

No. 2 cell phone provider Verizon Wireless, based in Bedminster, N.J., is a venture of telecommunications companies Verizon Communications Inc. of New York and Vodafone Group PLC of the United Kingdom.

___

On the Net:

Cingular Wireless LLC: http://www.cingular.com

[Matt]

cingular's full report:

http://biz.yahoo.com/prnews/060419/clw004.html?.v=44

[bobolito]

Highlights from press release:

FINANCIAL
- Operating Revenues $8.98B
- Operating Expenses $8.17B
- Operating Income $807M
- Net Income $354M
- ARPU $48.48
- Data ARPU $5.22

CUSTOMERS
- 1.68 net customer adds (900K postpaid, 147K prepaid, 633K wholesale)
- 55.8M total customers
- Postpaid churn 1.6%
- Blended churn 1.9%
- 25M data customers
- 8.2M have migrated from former AT&T Wireless to Cingular
- 89% of customers GSM equipped
- 97% of traffic on GSM

NETWORK
- 71% of CA/NV customers on Cingular's network (off T-Mobile)
- GSM network integration to be completed 3Q 06
- 296M licensed POPs
- 282M POPs covered
- Most major markets on 3G in 2H '06

[walkguru]

sounds good to me, now cingular, spread it around.

[jimbo]

Wow, Cingular put up some really good numbers for Q1.

[Fire14]

Originally Posted by bobolito Highlights from press release: CUSTOMERS - 1.68 net customer adds (900K postpaid, 147K prepaid, 633K wholesale) - 55.8M total customers - Postpaid churn 1.6% - Blended churn 1.9% - 8.2M have migrated from former AT&T Wireless to Cingular - 89% of customers GSM equipped - 97% of traffic on GSM NETWORK - 71% of CA/NV customers on Cingular's network (off T-Mobile) - GSM network integration to be completed 3Q 06

I am suprised that their Net Adds was as high as this, guess the analysts were off a little here.

See this article: http://forums.wirelessadvisor.com/wi...riers-1st.html (Merrill Lynch gives estimates on carriers 1st Qtr 06)

I am also impressed with their churn, wonder if they can ever get close to Verizon's low churn #'s?

As for some of these other #'s, I am suprised they still have 11% of users on TDMA still, guess these are the customers in the more rural area's that haven't had big GSM buildouts yet.

And I am really suprised at the low amount of Blue customers that have migrated, I really expected it to be above 12 Million by now, but guess a lot of people like me don't want to give up the better plans This means they have around 10 to 12 Million more to convert, depending on how many Blue customers didn't leave for another carrier.

As for the Network integration, It looks like they will be done 3+ months sooner then they expected, I wonder when they plan on getting the other 29% in CA off the T-Mobile network? by the 3rd Qtr I would guess?

[bobolito]

Originally Posted by Fire14 And I am really suprised at the low amount of Blue customers that have migrated,

I am not surprised at all. They really haven't given any significant incentives for blue customers to switch. But I don't think they have much blue customers left. Many have churned away to other carriers. My best estimate says there are less than 5 million blue customers still on former AWS plans. Cingular will end up converting those to the orange billing system if they don't migrate. So you should see your bill format change one of these days.

Originally Posted by Fire14 ... I wonder when they plan on getting the other 29% in CA off the T-Mobile network? by the 3rd Qtr I would guess?

According to the presentation, it looks like that will go into 2007.

[Fire14]

Cingular Sees Bulk Of Costing Savings In 2nd Half, 2007

Cingular Wireless expects a bulk of its cost savings to be realized during the second half of 2006 and early 2007, according to Chief Operating Officer Ralph de la Vega.

"We're well on our way to achieve this goal," De la Vega said during a conference call Wednesday.

Last year, Cingular worked on completing the integration of its back-office system. Now it wants to turn its eye on the information-technology system integration. Much of those savings won't occur until the second half of the year, he said.

The integration has so far helped deliver improving margins, he added.

Cingular also saw its year-over-year declines in average revenue per user moderate in the first quarter as a result of continued price discipline, said Chief Financial Officer Pete Ritcher.

ARPU fell by 2.3% over a year ago, the second quarter in a row in which the fall was in the low 2% level, Ritcher said during a conference call Wednesday. That compares with ARPU declines at the 5% level last year.

Declining ARPUs has been an issue for the wireless industry, as more aggressive pricing plans have led to declining revenue from the core voice business. As a result, the carriers are looking to other data services such as text messaging and music downloads for additional streams of revenue.

The Atlanta wireless carrier, reported net income of $354 million for the first quarter, reversing a loss of $240 million a year earlier, when it was early in the process of integrating itself with just-acquired AT&T Wireless. Cingular's parents agreed to merge in early March.

Revenue for the nation's largest wireless service provider by subscribers rose 9% to $8.98 billion from $8.23 billion a year ago.

[Fire14]

Originally Posted by bobolito I am not surprised at all. They really haven't given any significant incentives for blue customers to switch. But I don't think they have much blue customers left. Many have churned away to other carriers. My best estimate says there are less than 5 million blue customers still on former AWS plans. Cingular will end up converting those to the orange billing system if they don't migrate. So you should see your bill format change one of these days.

Wow, I really didn't think they lost that many Blue customers, I guess the integration problems did send a lot more then I thought off to other carriers.

And if I do remember correctly they did say by the end of 06, any customers that didn't migrate over would get put on the Orange billing system, didn't they also say they would give those Blue customers Rollover as well?

I guess by then I will know for sure, since I don't have any plans to migrate unless I really have to.

[KeithJamesMc]

The Merrill Lynch forecasts were actually correct for the amount of gross adds (4.7m), but they had over-estmated the churn figure, which meant the net adds were underestimated.

On the conference call, they broke down the net adds into 147k prepaid, 600k wholesale and 900k contract. So, I guess Tracfone had another good quarter - I think they make up the majority of the wholesale figure.

They also mentioned that wholesale now makes up 9% of the total base. It will be interesting if in this quarter Verizon report more directly-owned customers than Cingular - after the subtraction of wholesale.

[bobolito]

Sprint net profit down, operating earnings up

Sprint said it added 1.3 million customers in the quarter, compared with average analysts' estimates of about 1.4 million, according to five analysts contacted by Reuters. The company said that 502,000 of the additions were prepaid customers, who paid for calls in advance, while about 563,000 were higher value postpaid customers who paid monthly bills. http://biz.yahoo.com/rb/060426/telec...arns.html?.v=5

OFFICIAL PRESS RELEASE LINK:
http://www2.sprint.com/mr/news_dtl.do?id=11560


HIGHLIGHTS:
- Adds 1.34M net wireless subscribers (563,000 postpaid, 502,000 prepaid and 273,000 wholesale and affiliates)
- Gross adds were 4.1M subscribers
- Ended quarter with 48.9M total subscribers (39.1M direct postpaid, 3.1M prepaid, 5.4M wholesale, 1.3M affiliates)
- Postpaid churn was 2.1%
- Boost churn 5.4%
- $8.5B in revenues
- Adjusted Operating Income of $469M
- Adjusted OIBDA of $2.7B
- Direct postpaid ARPU $62 (Data ARPU = $7)
- 55,000 cell sites

[bobolito]

I am shocked the wholesale and affiliate adds were so low. In past quarter they used to provide the bulk of Sprint's total net adds.

[Fire14]

Originally Posted by bobolito I am shocked the wholesale and affiliate adds were so low. In past quarter they used to provide the bulk of Sprint's total net adds.

I guess with Sprint buying up most of the addiliate's, this has caused their #'s to be lower.

I guess the high Boost Mobile Churn is from poorer coverage with the iDEN in parts of the country.

[KeithJamesMc]

I am shocked the wholesale and affiliate adds were so low. In past quarter they used to provide the bulk of Sprint's total net adds.

It could also be that churn is starting to kick-in on the Virgin Mobile base. I don't think Virgin Mobile publish seperate figures so I guess we'll never know.

[xenophon]

Originally Posted by bobolito Sprint net profit down, operating earnings up OFFICIAL PRESS RELEASE LINK: http://www2.sprint.com/mr/news_dtl.do?id=11560 HIGHLIGHTS: - Adds 1.34M net wireless subscribers (563,000 postpaid, 502,000 prepaid and 273,000 wholesale and affiliates) - Gross adds were 4.1M subscribers - Ended quarter with 48.9M total subscribers (39.1M direct postpaid, 3.1M prepaid, 5.4M wholesale, 1.3M affiliates) - Postpaid churn was 2.1% - Boost churn 5.4% - $8.5B in revenues - Adjusted Operating Income of $469M - Adjusted OIBDA of $2.7B - Direct postpaid ARPU $62 (Data ARPU = $7) - 55,000 cell sites

Any idea on how many of the 55,000 towers are CDMA vs. iDen? Last number I've seen, there were about 26,000 CDMA towers. I've heard that Sprint has been adding more CDMA on existing iDen sites.

Does the 48.9m customers include purchased affiliates or all affiliates?

The churn is really not that bad considering expected merger effect. A few years ago, 2.2% churn was considered excellent.

[Andy]

Cingular does have some pretty impressive numbers there. I wonder how T-Mobile and Verizon did.

[larry]

Those 55,000 cell sites give them a lot to work with. They'll be able to save money by adding CDMA to IDEN towers and vice versa rather than to have to build new ones. But I'm wondering if that 55K number includes the purchased affiliates and the ones that are pending to be purchased (Ubiquitel).

[bobolito]

Wireless companies have a neverending desire to make numbers as large as possible, so they will present figures in a way that they can publish their largest number. So I would venture to guess that the 55,000 sites includes all affiliates.

Xenophon, the 48.9M includes all affiliates. See the breakdown next to the figures in parenthesis.

I think Fire14 hit the nail right on the head. It makes sense now that the acquired affiliates are no longer counted as affiliates, so with less affiliates out there, the net adds from affiliates goes down and direct net adds goes up.

[Matt]

Originally Posted by Andy84094 Cingular does have some pretty impressive numbers there. I wonder how T-Mobile and Verizon did.

They didn't report yet. Verizon is probably soon, DT (TM) isn't until May 11 I think.

[jones]

Originally Posted by larry Those 55,000 cell sites give them a lot to work with. They'll be able to save money by adding CDMA to IDEN towers and vice versa rather than to have to build new ones. But I'm wondering if that 55K number includes the purchased affiliates and the ones that are pending to be purchased (Ubiquitel).

Is it Possible they could have Duplicated some cell Site Count?
Like if both are colocated in a Tower, CDMA Counted it and it was also Counted on IDEN.

[bobolito]

I believe so. But don't forget they are not counting towers. They are counting SITES. This means that they could have Sprint and Nextel panels on the same tower, and technically that is two different sites. So, yes, they count as two even if on the same tower.

[ctk74]

Verizon has another record quarter
http://investor.verizon.com/news/view.aspx?NewsID=734
Wireless:

Verizon Wireless again added the most retail customers in the industry during the first quarter. Retail net additions were 1.6 million of the company’s 1.7 million total net additions, an increase of 3.1 percent over first quarter of 2005. The company now has 50.7 million retail customers of a total 53.0 million customers.
Service revenues (which do not include taxes and regulatory fees) increased 16.0 percent to $7.6 billion for the first quarter 2006. Average monthly service revenue per customer (ARPU) was $48.67, down 0.7 percent from the similar period in 2005.
Verizon Wireless continued to set the industry standard for cost efficiency, delivering the lowest cash expense. Cash expense per customer declined 6.6 percent year-over-year to $26.99 per month, the second-lowest quarterly level in the company’s history.
Data services revenues more than doubled year-over-year, contributing $872 million. In the first quarter, 11.5 percent of service revenues came from data services, up from 6.3 percent the previous year. Data ARPU increased 79 percent from first quarter 2005. The company now has 26.1 million data customers -- a 47 percent increase compared with first quarter 2005.
Verizon Wireless continued to increase the popularity of its national 3G EV-DO high-speed network, adding more broadband services and devices for both business and consumers. At the end of the first quarter, 6.2 million customers had broadband-capable devices.
For business, the company introduced a pay-as-you-go option for BroadbandAccess, which lets customers sign on for 24-hour sessions from laptops embedded with EV-DO capabilities; Field Force Manager, a location-based service for small and medium-sized businesses to map the location of field workers, dispatch jobs and receive reports; and GlobalEmail for e-mail access in more than 50 countries. GlobalEmail is currently available on the Samsung i830, which allows international travelers to keep one phone and one phone number to stay connected via calls and e-mail. Other new business devices included Palm’s Treo 700, the first Windows Mobile-based Treo smartphone, and additional laptops and PDAs with EV-DO embedded capabilities.
For consumers, the company launched broadband V CAST Music in January, and already has expanded its library to 1 million songs from artists at major music labels and at independent providers. V CAST Music is the world’s most comprehensive mobile music service, allowing customers to download music over the air, to transfer their existing digital music collection from the PC to their wireless phones, and to identify a song title and artist by holding their phone near music that’s playing and launching identity software. The company now has three V CAST music-enabled phones. The company also launched VZ Navigator, with audible turn-by-turn instructions, mapping and the ability to find more than 14 million points of interest.
Get It Now services continued to grow to an industry-leading 9.6 billion text messages exchanged during the first quarter; more than 171 million picture and video messages exchanged; and nearly 45 million downloads of games, exclusive content, ringtones and ringback tones.
During the first quarter, the company continued to expand and diversify its distribution channels by making its prepaid service available at Wal-Mart locations nationwide. Customers now can purchase Verizon Wireless service and equipment at 2,100 Verizon Wireless Communications stores, including stores in Circuit City and BJ’s, and from 12,000 additional retail locations, including Verizon Wireless agents throughout the U.S. and national retailers such as Best Buy and Costco.

[Matt]

Suncom:

http://biz.yahoo.com/prnews/060502/phtu055.html?.v=22

- Service revenues increased 3.9% to $155.5 million from $149.6 million
in the fourth quarter of 2005 reflecting the higher level of
subscribers in the quarter, partially offset by modestly lower ARPU.
- Roaming revenues were $21.5 million vs. $23.8 million a year ago as a
higher volume of minutes was partially offset by lower rates. Total
roaming minutes of use (MOUs) were 276.7 million vs. 225.4 million a
year ago.
- ARPU of $51.55 in the first quarter of 2006 was down about 1% from
$51.93 in the fourth quarter of 2005 reflecting the impact of modestly
lower access points as well as lower billed airtime.
- Monthly churn in the first quarter of 2006 was 2.5%, compared with 2.9%
a year ago, reflecting a stabilization of our subscriber base and
helped by the absence of the rebranding that occurred in the first
quarter 2005.

SunCom Wireless ended the quarter with a total of 1,007,114 subscribers compared to 965,822 subscribers at year end 2005.

[Matt]

Verizon's full press release:

http://biz.yahoo.com/prnews/060502/nytu038.html?.v=52

[ctk74]

Originally Posted by Matt Suncom: http://biz.yahoo.com/prnews/060502/phtu055.html?.v=22 - Service revenues increased 3.9% to $155.5 million from $149.6 million in the fourth quarter of 2005 reflecting the higher level of subscribers in the quarter, partially offset by modestly lower ARPU. - Roaming revenues were $21.5 million vs. $23.8 million a year ago as a higher volume of minutes was partially offset by lower rates. Total roaming minutes of use (MOUs) were 276.7 million vs. 225.4 million a year ago. - ARPU of $51.55 in the first quarter of 2006 was down about 1% from $51.93 in the fourth quarter of 2005 reflecting the impact of modestly lower access points as well as lower billed airtime. - Monthly churn in the first quarter of 2006 was 2.5%, compared with 2.9% a year ago, reflecting a stabilization of our subscriber base and helped by the absence of the rebranding that occurred in the first quarter 2005. SunCom Wireless ended the quarter with a total of 1,007,114 subscribers compared to 965,822 subscribers at year end 2005.

Finally....SunCom tops a million customers. How have they been able to survive this long? Please T-Mobile, put them out of their misery.

[Etorres777]

Only 2.8 Million to go, getting closer, and closer, and closer...

Originally Posted by Matt Verizon's full press release: http://biz.yahoo.com/prnews/060502/nytu038.html?.v=52

[EdwardP]

Here's América Móvil (site designed for Internet Explorer):

América Móvil reported a net profit of 9.9 billion Pesos in the first quarter of 2006, more than double that of the same quarter for 2005. Revenues were 50.7 billion Pesos, an increase of 26.4% over last year.

The number of wireless customers at the end of the quarter: 100,604,000

Included in the above customer count are 6,902,000 Tracfone customers. Tracfone added 767,000 customers during the first quarter. Tracfone's revenue for the quarter increased 36% to $309 million and they had a break-even quarter. TracFone's MOU (minutes of usage) improved to 65 and their churn rate was 4.1% (it was 3.8% in the first quarter of 2005). At the end of the first quarter of 2005, TracFone had 4,851,000 customers.

[Fire14]

Originally Posted by Etorres777 Only 2.8 Million to go, getting closer, and closer, and closer...

I noticed both Cingular & Verizon had close to the same net adds for the quater, I wonder if this is saying the market is starting to get saturated or if the advertising has been helping Cingular keep up with Verizon on new adds, or if there are other factors involved?

[bobolito]

I believe it is a combination of factors: advertising, service improvements, market saturation, competition.

[Fathead]

Originally Posted by bobolito I believe it is a combination of factors: advertising, service improvements, market saturation, competition.

Exactly. I think Cingular finally hit the same point with the advertising that Verizon is at, for all intents and purposes they are almost identical in pricing, and the pool of potential new customers is shrinking.