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Expanded margins, subscriber growth and increased data traffic helped Cingular Wireless, the largest US mobile-phone carrier following its acquisition with AT&T Wireless, report a 56 per cent increase in third-quarter profits.

The Atlanta-based wireless carrier – a joint venture between SBC Communications and BellSouth - said profits increased to $222m from $142m a year earlier, on sales that grew to $8.75bn from $4.29bn before the October 2004 takeover of AT&T Wireless.

The sales gain came despite hurricanes Katrina and Rita which led to a $96m repair bill and $31m in credits to customers in the areas hit by the hurricanes.

Stan Sigman, Cingular’s chief executive, said, “I am pleased with our continued improvement in margins, with the performance of our enterprise business, and with our steady stream of new and innovative offers for consumers. Though we of course have not yet realised all the benefits of the merger, we are already ahead of where we planned to be on the journey. In just a year we have added nearly 5m customers, significantly boosted our margins, improved churn, and delivered positive financial performance.”

Cingular’s operating profit margin before depreciation and amortisation widened to 28.5 per cent from 26.7 per cent from a year ago reflecting the continued progress on post-merger integration, which senior executive said is “on or ahead of schedule.”

Merger costs for the quarter were $241m and the company said on Wednesday that it will have an additional $620m in costs to complete the integration of AT&T Wireless.

Cingular added a net 867,000 subscribers – somewhat less than analysts had expected - during the quarter to reach 52.3m. Customers defections, or ‘churn’, rose to 2.3 percent from 2.2 percent in the second quarter reflecting the relatively high number of contracts that expired in the quarter.

Average revenue per user, a key measure for the wireless industry, slipped to $49.65 from $50.43 in the second quarter reflecting the growing uptake of so-called family plans, Cingular’s ‘rollover’ minutes policy and the transition of AT&T Wireless customers to lower priced Cingular plans.

Offsetting the decline in overall Arpu, Data Arpu increased to $4.33, a sequential improvement of 4.1 per cent. Cingular said 22m of its customers now have data plans. The company also highlighted its continued strength in supplying enterprise services to corporate customers – it added more than 700 new high-end service contracts in the quarter

Stan Sigman, Cingular’s chief executive, said, “I am pleased with our continued improvement in margins, with the performance of our enterprise business, and with our steady stream of new and innovative offers for consumers.

“Though we of course have not yet realised all the benefits of the merger, we are already ahead of where we planned to be on the journey. In just a year we have added nearly 5m customers, significantly boosted our margins, improved churn, and delivered positive financial performance.”

Copyright The Financial Times Limited 2017. All rights reserved.
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