By Lisa Johnston
New products on display at the American International Toy Fair, held in N
San Diego – No-contract carrier Leap Wireless suffered continued subscriber losses, a revenue decline, and higher operating and net losses in its fiscal first quarter compared to the year-ago quarter.
In contrast, the company shrank its fourth-quarter and full-year net loss in 2012.
The carrier continued to attribute the first-quarter results to dropping multiple national retailers to focus on fewer more productive national chains, a decision to stop marketing daily prepaid PAYGo service to new customers beginning last October, and continued deemphasis on marketing Cricket Broadband data service to laptops and mobile hot-spot devices.
Despite the quarter’s performance, CEO S. Douglas Hutcheson saw improvements on the horizon, in part based on the improvement in the year-over-year percentage decline in gross customer additions compared to the fourth quarter. In addition, he said, although the “transition we are making to higher quality smartphones and increased out-the-door device pricing is contributing to lower gross additions in the near term, these initiatives and other customer-experience improvements we have introduced are leading to expected improvements in core wireless churn levels.”
The carrier is continuing to introduce initiatives such as a new family plan and add-a-line promotion, and it is seeing improved iPhone sales, “having worked with Apple on new advertising, pricing plans, and other promotions,” Hutcheson said.
During the rest of 2013, Leap expects to continue to improve its device line-up with new handsets like the Samsung Galaxy S 4 and to expand device financing options, he said.
CFO R. Perley McBride said the company’s “focus on higher-ARPU customers over the past few quarters has driven improvements in contribution margin, adjusted OIBDA margin and free cash flow.”
For the fiscal first quarter, revenues fell 4.3 percent to $789.9 million compared to the year-ago quarter, the operating loss grew by 86.1 percent to $29.4 million, and its net loss grew 16.2 percent to $109.6 million.
The carrier lost 93,037 subscribers compared to a year-ago net gain of 258,060, and the churn rate rose to 3.6 percent from the year-ago 3.3 percent.
The subscriber base fell to 5.2 million, down 16 percent from the year ago.
In other announcements, the company said:
--71 percent of handset activations in the first quarter were for smartphones.
--it is exploring cost-effective ways to expand its LTE footprint, “which may include deploying additional facilities-based coverage and entering into possible partnerships or joint ventures with others.’
In 2012, the company shrank its fourth-quarter and full-year net loss. Net losses for the quarter came to $73.8 million, or 6 percent less than a year-ago loss of $78.7 million. The net loss for the year shrank 41 percent to $187.3 million from 2011’s net loss of $317.7 million.
Also in the fourth quarter, total revenues fell 1.5 percent to $756 million, but for the year, revenues were up 2.3 percent to $2.14 billion.
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