Cingular Wireless LLC, the nation's largest cell-phone provider, reported a much narrower second-quarter profit on hefty merger integration costs, but saw strong growth in subscribers and revenue.
The Atlanta-based joint venture of BellSouth Corp. and SBC Communications Inc. said Wednesday it earned $147 million for the three months ending June 30, compared to a profit of $339 million for the same period a year ago. The year-ago figure assumes Cingular and AT&T Wireless Services Inc. were a single company then, although their $41 billion deal was not completed until October 2004.
Revenue in the April-June quarter was $8.61 billion, compared to $4.19 billion a year ago. The prior-year revenue figure includes only Cingular's sales.
Cingular said it added 1.1 million net subscribers in the second quarter, raising its total to 51.6 million and keeping it ahead of No. 2 provider Verizon Wireless, which had 45.5 million subscribers through the end of the first quarter. Verizon Wireless hasn't reported its second-quarter earnings yet.
Telecom analyst Jeff Kagan said Cingular's ability to hang on to its No. 1 position in subscribers is a good sign following the AT&T Wireless merger.
"So far so good, but Cingular (and all carriers) has to stay focused," Kagan said.
Average monthly revenue per user in the quarter was $50.43, down 0.6 percent from $50.75 a year ago. Average monthly churn — the rate at which customers switch to other providers — was 2.2 percent in the quarter, compared to 2.7 percent for the same period a year ago.
Cingular said merger integration costs were $204 million in the second quarter, increasing its operating expenses to $8.1 billion.
Chief executive Stan Sigman said the company is working hard to improve customer service and to make sure the integration of Cingular and AT&T Wireless continues smoothly.
"We are making progress and growing the business, though we of course have a long way to go before our work is done," Sigman said.
For the first six months of the year, Cingular said it lost $93 million, compared to a profit of $554 million in the same period a year ago. Six-month revenue was $16.84 billion, compared to $8.15 billion a year ago.
