Cingular 4th Qtr Results
January 22 2004 - 2:00AM
UK Regulatory
RNS Number:5108U
Bellsouth Corp
21 January 2004
HOLD FOR RELEASE FOR MORE INFORMATION
January 21, 2004 Investor Relations Contact:
5:00 p.m. EST Kent Evans
404-236-6203
kent.evans@cingular.com
Jeff Cannon
404-236-5486
jeffrey.cannon@cingular.com
Media Relations Contacts:
Clay Owen
404-236-6153 (office)
404-538-0124 (wireless)
clay.owen@cingular.com
Cingular Wireless Reports Fourth-Quarter and Full Year Results, Launches Network
Expansion and Customer Service Initiatives
* Fourth-quarter net adds total 642,000 to reach more than 24 million
cellular/PCS subscribers; full-year net adds total 2.1 million, up
substantially from the previous two years.
* Revenues grow 5.6 percent to $3.9 billion in the fourth quarter
reaching $15.5 billion for 2003.
* Cellular/PCS data revenues grow 85 percent versus the fourth quarter
of 2002 - More than 1 billion SMS messages delivered during the
quarter.
* Cingular's nationwide GSM/GPRS network conversion continues to
progress ahead of schedule, now available to 93 percent of company's
operational POPs.
ATLANTA - Jan. 21, 2004 - Cingular Wireless LLC, the United States' second
largest wireless company, today reported fourth-quarter results that include
continued strong subscriber growth and additional progress in its nationwide
GSM/GPRS network overlay.
For the three months ended December 31, 2003, Cingular, a joint venture between
SBC Communications (NYSE: SBC) and BellSouth Corporation (NYSE: BLS), achieved
net subscriber additions of 642,000, bringing its nationwide cellular/PCS
customer base to over 24 million. Gross adds in the fourth quarter totaled 2.6
million, the second highest quarter in Cingular's history - bested only by
third-quarter 2003's 2.7 million. Churn was 2.8 percent, in line with third-
quarter 2003 results. Porting requests under wireless local number portability
rules implemented in November were below expectations and not a significant
factor in the quarter's results.
For the full year 2003, Cingular Wireless added 2.1 million subscribers, the
strongest annual net add total in the company's history.
Cingular has achieved this subscriber growth while executing a nationwide
network overlay of a next generation GSM/GPRS technology. As of Dec. 31,
Cingular's GSM/GPRS network was available to 93 percent of the company's
operational POPs, up from approximately 66 percent six months earlier and 81
percent at the end of the third quarter. Cingular continues to run ahead of its
original schedule for GSM/GPRS deployment and expects to achieve 100 percent
coverage of its network in 2004. Additionally, the vast majority of the new
networks are already performing at or exceeding strict quality standards and
bringing our GSM customers the truest voice quality of any wireless company.
Customer response to GSM/GPRS continues to be strong as 57% of Cingular's total
minutes are now carried on the GSM network. GSM is the world's most popular
wireless technology, with more than 900 million subscribers in 200 countries. It
provides customers the widest selection of handsets in the industry with
features like color screens and built-in cameras and the latest data services,
including multi-media messaging and high speed packet data. For example,
Cingular currently offers 14 handsets from 6 different vendors, all of which
either have built-in cameras or camera attachments for use with multi-media
messaging. At year's end, more than 45 percent of Cingular's handsets in
service were GSM capable, up from 27 percent at the end of the second quarter of
2003 and 35 percent at the end of the third quarter.
In 2003, Cingular led the industry in total data revenue, increasing almost 60%
over 2002, driven by an 85% increase in short messaging service (SMS) volumes
combined with continued strength in its proprietary Mobitex data-only network
that served 789,000 subscribers at the end of the year. During 2003, Cingular
successfully launched a host of new data applications like instant messaging and
multi-media messaging that will continue to drive data revenue growth into 2004.
"Cingular took huge steps forward in 2003," said Stan Sigman, President and CEO
of Cingular Wireless, "and I am very proud of how well Cingular's talented
employees executed over the past year. We accelerated subscriber growth. We
moved our nationwide network conversion forward ahead of schedule, delighting
customers with the quality of GSM. And we delivered a host of innovations
through new data services and products that integrate wireless and wireline
communications."
"Now, our clear goal is to move Cingular to the next level," Sigman continued,
"and build an even stronger foundation for sustained growth. The keys are
outstanding network performance and a world-class customer experience. To
achieve these goals, we have launched two major initatives. The first is a
nationwide drive to improve coverage and network quality. We started this
initiative in the fourth quarter by adding more than 750 cell sites, and it will
continue through 2004. This program builds on the progress we've made with GSM/
GPRS and the moves we've made to add spectrum. The second initiative, which
also has already begun, is a comprehensive enhancement of our customer service
systems and procedures. While these projects pressure margins in the near term,
they will strengthen our growth prospects long term. I am very confident in our
ability to deliver on these initiatives, and I am excited about what Cingular
can accomplish in 2004."
Financial Results
Cingular's fourth-quarter financial results were shaped by continued strong
subscriber growth and by aggressive execution in terms of network overlay,
customer retention programs and new network expansion and customer service
initiatives.
* Fourth-quarter revenues grew to $3.9 billion, up 5.6 percent
compared with the year-ago fourth quarter.
* Cellular/PCS data revenue increased 85 percent year-over-year,
largely due to rising popularity of SMS (short messaging service), as
well as downloadable ringtones and photo messaging. Cingular delivered
over 1 billion SMS messages during the quarter.
* Cellular/PCS ARPU (average revenue per user), which represents the
service revenue per subscriber, was $49.03, down $2.81 from fourth
quarter of last year.
* Total operating expenses were $3.6 billion in the fourth quarter, up
12.4 percent from $3.2 billion in the year-ago period. Expenses were
driven by significantly higher gross customer additions, extensive
customer retention programs, increased advertising and costs
associated with launching wireless local number portability.
* Operating income was $329 million for the quarter, compared with
$516 million for the same quarter a year ago.
In the fourth quarter, to be consistent with emerging industry practices,
Cingular's income statement presentation was changed for the current and prior
year periods to reflect, as revenues, billings to our customers for the
Universal Service Fund (USF) and other regulatory fees and to reflect, as
expenses, the costs related to payments into the associated regulatory funds.
The impact of this change on fourth quarter revenues and expenses was $96
million. These revenues and expenses for the same quarter a year ago were $47
million. Operating income and net income for all periods have been unaffected.
Enhanced spectrum position
As it has deployed its GSM/GPRS network, Cingular has also made strategic moves
to enable access to new markets and to improve its spectrum position in existing
markets. These initiatives will enable Cingular to expand its network, increase
capacity and lower roaming costs.
* In December, Cingular closed its transaction with Sunshine PCS
purchasing additional spectrum in the Florida markets of Tallahassee,
Panama City, and Ocala.
* Cingular agreed to purchase wireless licenses from NextWave Telecom
Inc. for $1.4 billion. These licenses cover approximately 83 million
POPs in 34 markets. The transaction requires FCC approval, and
Cingular expects the transaction to close in the first half of 2004.
* In September, Cingular agreed to acquire additional PCS spectrum and
operations in Texas, Arkansas, and Louisiana and cellular operations
in Louisiana through an agreement with US Unwired Inc. This
transaction is expected to close in the first quarter of 2004.
* In October, Cingular announced an agreement with Dobson
Communications to exchange Dobson's ownership in its Eastern Shore of
Maryland cellular property for Cingular's ownership in its Northwest
Michigan cellular property. This transaction is also expected to
close in the first quarter of 2004.
Wireless data initiatives
* Cingular is moving forward in implementing EDGE (Enhanced Datarate
for GSM Evolution) high speed data technology throughout its network. Cingular
was the first carrier in the world to launch EDGE when it turned up its network
in Indianapolis in July 2003. Cingular will have substantially all of its
markets enabled in the high speed EDGE technology by mid-2004. EDGE allows for
data rates up to 170 Kbps with average speeds ranging between 75-135 Kbps. The
EDGE deployment will be completed in 2004.
Wireless/Wireline Integration
Cingular and its parent companies SBC Communications (NYSE: SBC) and BellSouth
Corporation (NYSE: BLS) continue to exploit the opportunities and benefits of
wireless and wireline integration.
* 10% of Cingular's gross postpaid customer additions for the quarter
were from the parents' sales channels. These channels contributed over 875,000
wireless customers during 2003.
* In October Cingular introduced FastForward(TM) - the first device that
marries the convenience of wireless service with your home or office. The
patented device - designed as a cradle to hold a wireless phone - simply plugs
into an electrical outlet. When the Cingular Wireless phone is "cradled", calls
to the wireless phone are forwarded to a designated landline phone, while the
wireless phone's battery is automatically re-charged.
ABOUT CINGULAR WIRELESS
Cingular Wireless, a joint venture between SBC Communications (NYSE - SBC) and
BellSouth (NYSE - BLS), serves more than 24 million voice and data customers
across the United States. A leader in mobile voice and data communications,
Cingular is the only U.S. wireless carrier to offer RolloverTM, the wireless
plan that lets customers keep their unused monthly minutes. Cingular has
launched the world's first commercial deployment of wireless services using
Enhanced Datarate for GSM Evolution (EDGE) technology. Cingular provides
cellular/PCS service in 43 of the top 50 markets nationwide, and provides
corporate e-mail and other advanced data services through its GPRS, EDGE and
mobitex packet data networks. Details of the company are available at
www.cingular.com.
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www.cingular.com/newsroom
BellSouth's fourth quarter earnings conference call, during which Cingular's
earnings results will be discussed, will be held at 10 a.m. Eastern time on
January 22, 2004 at www.bellsouth.com/investor/.
SBC's will host its fourth quarter earnings conference call, during which
Cingular's earnings results will be discussed, on Jan. 27, 2004. It will be
broadcast live via the Internet at 10 a.m. Eastern time at www.sbc.com/
investor_relations.
Forward-looking Information: In addition to historical information, this
document and the conference calls referred to above may contain forward-looking
statements regarding events and financial trends. Factors that could affect
future results and could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include:
* the pervasive and intensifying competition in all markets where we
operate;
* problems associated with the transition of our network to higher speed
technologies;
* slow growth of our data services due to lack of popular applications,
terminal equipment, advanced technology and other factors;
* shortages and unavailability of spectrum for new services and
geographic expansion;
* sluggish economic and employment conditions in the markets we serve;
* changes in available technology that make our existing technology
obsolete or expensive to upgrade;
* the final outcome of FCC proceedings, including rulemakings, and
judicial review, if any, of such proceedings;
* impact of local number portability on our growth and churn rates,
revenues and expenses;
* enactment of additional state and federal laws, regulations and
requirements pertaining to our operations;
* availability and cost of capital;
* impact of any industry consolidation; and
* the outcome of pending or threatened complaints and litigation.
Such forward-looking information is given as of this date only, and Cingular
assumes no duty to update this information.
This information is provided by RNS
The company news service from the London Stock Exchange
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