("UPDATE: Leap Wireless 1Q Loss Widens As Costs Rise; Revenue Beats Views," published at 5:25 p.m. EDT, misstated the percentage change in Leap's stock so far this year in the last paragraph. The correct version follows:) By Steven Russolillo Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Leap Wireless International Inc.'s (LEAP) first-quarter loss widened as costs surged, although the prepaid mobile company's revenue rose more than expected amid continuing signs of a turnaround. San Diego-based Leap, which returned to customer growth in the fourth quarter, said Wednesday it registered a second straight period of net customer additions. The company, which has benefited from growth in the prepaid sector, has attracted customers wary of being tied down to a long-term contract. Still, Leap continues to underperform its rivals by posting repeated losses. Leap added about 330,574 net customers in the first quarter, down from 445,768 a year earlier. It ended the period with 5.8 million subscribers, up 8.3% from a year ago. Churn, a gauge of customer turnover, fell to 3.1% from 4.5%. Leap is starting to see the payoff from a massive overhaul of its business last summer. The company tweaked its plans to offer more attractive flat-rate terms, pushed its faster data-centric 3G network and focused on selling smartphones, moves intended to stave off competition from the larger nationwide carriers who are attracted to the growth opportunities of the prepaid business. The company said 40% of its cell phone customers opted for a smartphone in the first quarter, which yield higher monthly rates and will result in fewer defections down the line. But Leap's high costs were due to significant upgrades to its new smartphones and higher customer adoption of its all-inclusive service plans, which resulted in increased expenses for regulatory fees and telecommunications taxes, the company said. The shift in strategy followed a similar move last year by rival MetroPCS Communications Inc. (PCS), which also offers an all-inclusive plan that bundles together all taxes and fees. Earlier this week MetroPCS's first-quarter earnings more than doubled as increased demand prompted the prepaid-wireless provider to register its highest-ever quarterly customer additions. Leap and MetroPCS have traditionally offered basic cell phone service without a contract. But their respective moves toward smartphones underscores a growing demand for more sophisticated mobile devices, even with less affluent consumers. Leap reported a first-quarter loss of $96.2 million, or $1.26 a share, compared with a year-earlier loss of $68 million, or 90 cents a share. Revenue jumped 14% to $779.9 million. Analysts polled by Thomson Reuters most recently expected a loss of $1.07 a share on $739 million in revenue. Operating costs jumped 18%. Leap shares were recently down 0.5% at $15 in after-hours trading. The stock is up 23% in 2011. -By Steven Russolillo, Dow Jones Newswires; 212-416-2180; firstname.lastname@example.org --Matt Jarzemsky contributed to this report.