By John Kell
Leap Wireless International Inc.'s (LEAP) second-quarter loss
sharply widened as the pay-as-you-go wireless provider recorded a
steep loss tied to a debt payment and lower revenue as the number
of subscribers declined.
The company added 283,066 gross customers, compared with 492,720
additions a year earlier. Leap ended the quarter with 4.8 million
subscribers, 18% lower than a year ago. Churn, a gauge of customer
turnover, inched down to 4.3% from 4.4%.
Last month, Leap agreed to be acquired by larger peer AT&T
Inc. (T) for about $1.2 billion in cash, a move aimed to shore up
the larger company's access to the airwaves it needs to offer
mobile service. The deal, expected to receive close scrutiny from
regulators, is expected to close in the next several months.
Leap, which offers cellphone service under its Cricket brand,
had embarked on a major business overall to attract higher-income
customers with pricier smartphones. But the company has been hit
hard by high unemployment that has hurt the company's traditionally
lower-income customer base. Leap has only reported one quarterly
profit since 2007, in the third quarter of 2012 when results
benefited from a large gain on the exchange of spectrum
licenses.
In the latest quarter, Leap reported a loss of $163.1 million,
or $2.09 a share, compared with a prior-year loss of $41.6 million,
or 54 cents a share. The latest results included a $73 million loss
on early extinguishment of debt.
Total revenue fell 7% to $731.5 million.
Analysts surveyed by Thomson Reuters expected a loss of $1.07 on
$735 million in revenue.
The company swung to an operating loss of $7.6 million, compared
to a prior-year operating profit of $31.6 million.
Average revenue per user increased 7.8%.
Core wireless gross customer additions fell 34% to 239,514. Core
wireless churn grew to 3.6% from 3.3%.
Shares, inactive in after-hours trading, closed the regular
session down five cents to $16.63.
Write to John Kell at john.kell@wsj.com
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