Verizon falls short, AT&T pleasantly surprises

Verizon falls short, AT&T pleasantly surprises

BYLINE: DAN MEYER

BODY:

A broad cross section of wireless operators reported first-quarter results last week with most coming close to hitting their lowered subscriber additions and financial expectations even with continued uncertainty surrounding the economy.

Verizon Wireless Inc., which continues as the largest U.S. operator with nearly 30 million wireless customers, disappointed many analysts when it reported 452,000 net customer additions for the first quarter, compared with estimates of around 500,000 net additions. Adding insult to its results, Verizon also reported that due to the loss of 266,000 reseller customers, its actual net additions for the quarter were only 186,000 subscribers.

Verizon Wireless said the reseller problem was associated with increased churn results from nationwide resellers and that without those losses, it would have posted net additions similar to last year.


In contrast to Verizon Wireless' customer addition problems, AT&T Wireless surpassed both company forecasts and analysts' expectations, signing up 650,000 net customers during the quarter. Analysts had expected the carrier to add around 550,000 subscribers, but with lower-than-expected churn results of 2.6 percent and momentum from its mLife advertising campaign launch, the carrier posted the second-highest customer additions of the six nationwide operators.
One of the only downsides for AT&T Wireless during the quarter was higher-than-expected cost per gross addition results of $375, well ahead of estimates of $355. John Zeglis, chairman and chief executive officer of AT&T Wireless, noted the high CPGA number was due to the inclusion of the marketing costs associated with its mLife campaign, which he said equaled about $24 per gross customer addition.

While VoiceStream Wireless Corp. is not expected to release full results until next month, parent company Deutsche Telekom posted preliminary results for the first quarter showing VoiceStream exceeded $1 billion in service revenue and posted $75 million in EBITDA, its first positive EBITDA results, which DT attributed to careful cost management during the quarter.

VoiceStream also made progress on its attempt to reduce its prepaid customer base, noting that portion of its customer base shrank by 48,200 customers during the quarter. The reduction of pre-pay customers helped drive down customer churn from 4.8 percent during the fourth quarter of last year to 4.4 percent during the first quarter.

Regional operator Alltel Corp., which is in the process of acquiring CenturyTel Inc.'s wireless assets, posted quarterly results in line with the continued competition it has experienced from nationwide operators. The carrier reported a decrease in net additions, though ahead of company estimates, a slight drop in average revenue per user and an increase in CPGA. These results were somewhat offset by a decrease in customer churn for the quarter and an increase in wireless revenues.

Leap Wireless International Inc. reported 268,000 net subscriber additions during the quarter, which not only beat estimates, but also topped net customer additions for the two largest wireless carriers-Cingular Wireless and Verizon Wireless-for the quarter. The company reiterated its previous forecasts of serving 2 million customers by the end of the year.

Leap surprised some during its conference call when it noted some results were negatively impacted by an increase in both subscription and credit-card fraud during the quarter.

The credit-card fraud involved customers using phony or stolen numbers to purchase a phone from an indirect dealer and getting the first month of service free before the credit-card company realizes the card is fraudulent or stolen. The subscription fraud involved customers outsmarting Leap's deactivation program to attain an extra month of service without having to pay.

Both issues reportedly affected both the company's revenues and CPGA as Leap pays for the handset without getting a new customer. While Leap would not put a dollar figure on the amount it lost due to fraud, one analysts estimated it at around $6 million for the quarter.

Leap said it has implemented controls that were already having an impact on the fraud issues.

 

They need more than that. lol

 

Yeah they gain more customers than Cingular, but not more profit. Cingular will do way better than VoiceStream in the 2nd quater. Meaning customers and profit.

 

It really doesn't matter how many Customer you have, just to make profit. But it would help if you had alot of customer to make profit off of.