Cingular Cfo: Average Revenue Per User Stabilizing

NEW YORK -(Dow Jones)- As Cingular Wireless' customer turnover and subscriber growth trends improve, its average revenue per user appears to be stabilizing, according to Chief Financial Officer Pete Ritcher.

While average revenue per user fell to $48.86 from $49.97 a year ago, Ritcher said the rate of decline is slowing. He attributed the improving trends to keeping the turnover rate low, even the face of many expiring customer contracts.

"It's a real testament that the merger is working," he said during a conference call to discuss the company's quarterly results.

The nation's largest wireless carrier swung to a fourth-quarter profit of $204 million, reversing a loss of $495 million from a year ago. Revenue surged by more than 24% to $8.85 billion from $7.12 billion a year ago.

Data revenue continues to be an important component to Cingular. The average data revenue was $4.71 per person, up from $2.89 a year ago. The upgrade to a third-generation network, which will allow for better music and video features, should open new opportunities for revenue growth, Ritcher said.

The company also added 1.8 million net new subscribers, topping Wall Street's average estimate of 1.1 million. It ended the quarter with 54.1 million subscribers.

Cingular's turnover rate fell to 2.1% from 2.4% in the year-earlier period.

For the fourth quarter, Cingular spent $3 billion in capital expenditures, bringing the total to $7.48 billion for the year. For 2006, Ritcher said Cingular expects to spend $7 billion to $7.5 billion in 2006. Down the line, spending should fall to the mid-teens in terms of percentage of revenue.

The merger between Cingular and AT&T Wireless continues to proceed ahead of schedule, according to Ralph de la Vega, chief operating officer.

For 2005, Cingular had a net reduction of 490 stores or kiosksas a result of the integration. Few changes are expected for 2006.

"The bulk of the work is complete," de la Vega said. "I don't expect a significant change in the number of stores."

Cingular will be focusing on improving its indirect retail channels as well as distribution channels with partners such as RadioShack, de la Vega said. The company will also focus on consolidating its billing system.

With data revenue an increasingly important contributor, Cingular will be relying more on interactive cellphone features, such as its Medianet and Live Ticker,launches this quarter, as well as through content from partners Yahoo and HBO, de la Vega said.

Cingular also launched its push-to-talk feature in the fourth quarter. While it was too early to discuss the revenue contribution, customer response has been strong, he said.

For the fourth quarter, the customer turnover rate fell despite the two-year anniversary of the introduction of local number portability, which allowed customers to switch plans and keep their phone number. That caused many customers to switch plans and sign two-year contracts that would have expired in the December period.

Ritcher, the finance chief, said he sees steady improvement in the customer turnover rate.

Ritcher added the mix of customers should see a higher number of prepaid customers in the first quarter. The period traditionally sees more prepaid additions. He added that the average revenue per user for prepaid customers is rising.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 24th January 2006

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