US Carriers Report Mixed Fortunes
By Carlo Longino, Tue Apr 20 15:30:00 GMT 2004

Sprint PCS' first-quarter earnings showed a jump in revenues and subscribers, while merger mates AT&T and Cingular's results weren't so spectacular. Updated: Motorola delivers solid earnings.

Sprint PCS, the country's No. 4 carrier, added 414,000 net subscribers in the first quarter, blowing away analysts estimates, while revenue jumped 16 precent to $3.44 billion, cutting its net loss in half to 8 cents a share. The operator's ARPU was up $2 to $61, with nearly 10 percent of that coming from data. Churn came in at 2.9 percent, down from 3.1 a year ago, but up from 2.7 in the fourth quarter.

Cingular's operating income fell 28 percent to $559 million from $716 million a year ago, even though the No. 2 US carrier added 554,000 net new subscribers in the first quarter. Operating income in the previous quarter, though, was $329 million. Revenues increased 8.4 percent to $3.9 billion, but ARPU dropped 5.5 percent from a year ago to $47.95, also down 2.2 percent from last quarter. Churn dropped 1 percent to 2.7 percent.

Customers left AT&T Wireless in droves in the first quarter as the company continued to feel the pinch of number portability and its well-publicized computer problems. The company, which pre-reported some figures so that Cingular and its parent companies could better discuss the planned merger, lost 367,000 net subscribers in the quarter, and services revenue was essentially flat with the year-ago period at $3.746 billion. Among other things, AT&T said those revenues were helped by "increased regulatory fees", which would seem to be a strange thing to trumpet as giving your company a boost.

AT&T also disclosed that the US Department of Justice requested more information on its planned buyout by Cingular, a routine request that doesn't necessarily signal antitrust problems. But AT&T Wireless' figures bolster some investor grumbling that Cingular may have agreed too high a price for the company -- grumbling that will certainly grow louder if AT&T's second-quarter figures don't show marked improvement.

An interesting sidenote to these results is that they all underline the point we made yesterday that data use is growing in the US. AT&T said in its release data revenues were up, and Cingular's cellular data revenues were up 53 percent over last year, driven by text and picture messaging and ringtone downloads. Sprint said $6, or about 10 percent, of its ARPU came from data -- double the figure from the fourth quarter.

Motorola more than tripled its first-quarter earnings of a year ago, earning $609 million, buoyed by a 67 percent increase in sales in its mobile-phone business. The company's previous quarter was hit by the delayed introduction of several handsets, and the arrival of those models on the market gave the company a boost, as well as its market share, particularly in Europe. Motorola shipped 25.3 million handsets in the quarter, a 51 percent increase over the previous year.