AT&T Wireless, Cingular Report Mixed Earnings
AT&T Wireless and Cingular each had some negative numbers to report Wed. on the eve of the likely completion of their merger. The FCC and Justice Dept. have yet to finalize their merger orders, though by some accounts they may be only days away. As of Wed. afternoon, the FCC’s 2 Democrats, Comrs. Copps and Adelstein, still hadn’t voted electronically on the order.
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AWE said 3rd-quarter earnings were $117 million, down 25% from the year-earlier quarter. Revenue dropped 3.7% to $4.21 billion during the same period. After stabilizing in the last quarter, churn increased sharply, to 3.7% from 2.7%. Churn was 30 basis points higher than the 2nd quarter’s 2.4% rate. But revenue from wireless data services was up 145%.
CEO John Zeglis said he was pleased with aspects of the company’s performance, including higher free cash flow and customer additions. But he said churn rates remain an area of concern for the carrier. “Customer deactivations persist at unacceptable level,” he said: “We have a number of initiatives under way addressing this issue and are extremely focused as an organization on turning it around.”
Meanwhile, Cingular’s earnings were mixed. Operating income was $461 million, down 5.5% from the year-earlier quarter. On the positive side, the company reported a 657,000 net subscriber gain in the quarter, Cingular’s best-ever quarterly total. Wireless data revenue was up sharply, showing a 116% increase. Churn was 10 basis points higher than the previous quarter at 2.8%. Annual ARPU declined 5%. Cingular didn’t host a conference call Wed., referring analysts instead to upcoming calls from its parents SBC and BellSouth.
Cingular officials have been busy in recent days answering questions from the FCC as commissioners prepare their order. In at least 2 meetings with FCC staff, Cingular was asked to discuss the status of the Justice Dept.’s review of the merger. “I keep hearing an order could come out any day now,” said one carrier source. “My best guess is we'll see something by the end of the month, if not anymore this week.”