Cingular Quarterly Profit Drops as Costs Rise

[Kris Kumar]

http://today.reuters.com/investing/financeArticle.aspx?type=marketsNews&storyID=2005-07-20T193623Z_01_N20239470_RTRIDST_0_TELECOMS-CINGULAR-EARNS-UPDATE-3.XML

"Cingular Wireless, the biggest U.S. mobile provider, said on Wednesday its quarterly profit fell more than 56 percent on higher costs, but revenue rose as its subscriber base grew. Since October Cingular's profit has been hurt by efforts to combine with AT&T Wireless, including technical projects and layoffs of an equivalent of 11,000 full-time workers. ... The venture of SBC Communications and BellSouth Corp. said earnings fell to $147 million from $339 million a year ago as its costs rose to $8.1 billion from $3.5 billion a year ago. It reports on a proforma basis that assumes it owned AT&T Wireless in the year-ago quarter. Revenue grew to $8.6 billion from a proforma $8.2 billion a year earlier. But average revenue per user (ARPU) fell 5.6 percent to $50.43 from a year ago as customers signed on to discount family plans or rate plans that allow users to save unused phone time from month to month. Chief Financial Officer Peter Ritcher said Cingular hopes to improve its ARPU by increasing rates for its family plans."



The merger with AT&T Wireless, as we all know, had derailed Cingular's financial scorecard. It now seems, at least from the official report, that the merger is working well and Cingular's financial operations are slowly getting back on track. :? Current subscribers, especially the ones on family plans, watch out for a rate hike. :-( On the plus side, the report mentions the launch of Audiovox SMT5600 and also states that ARPU from data services based plans continued its strong growth.

[Kris Kumar]

http://today.reuters.com/investing/financeArticle.aspx?type=marketsNews&storyID=2005-07-20T193623Z_01_N20239470_RTRIDST_0_TELECOMS-CINGULAR-EARNS-UPDATE-3.XML

"Cingular Wireless, the biggest U.S. mobile provider, said on Wednesday its quarterly profit fell more than 56 percent on higher costs, but revenue rose as its subscriber base grew. Since October Cingular's profit has been hurt by efforts to combine with AT&T Wireless, including technical projects and layoffs of an equivalent of 11,000 full-time workers. ... The venture of SBC Communications and BellSouth Corp. said earnings fell to $147 million from $339 million a year ago as its costs rose to $8.1 billion from $3.5 billion a year ago. It reports on a proforma basis that assumes it owned AT&T Wireless in the year-ago quarter. Revenue grew to $8.6 billion from a proforma $8.2 billion a year earlier. But average revenue per user (ARPU) fell 5.6 percent to $50.43 from a year ago as customers signed on to discount family plans or rate plans that allow users to save unused phone time from month to month. Chief Financial Officer Peter Ritcher said Cingular hopes to improve its ARPU by increasing rates for its family plans."



The merger with AT&T Wireless, as we all know, had derailed Cingular's financial scorecard. It now seems, at least from the official report, that the merger is working well and Cingular's financial operations are slowly getting back on track. :? Current subscribers, especially the ones on family plans, watch out for a rate hike. :-( On the plus side, the report mentions the launch of Audiovox SMT5600 and also states that ARPU from data services based plans continued its strong growth.

[hotdram]

Maybe the logo should read:
"Cingular
Raising Prices"

~Rob

[Mike Temporale]

I'm not familiar with US prices, but I thought Cingular was already on the expensive side? This can't be good for current and future customer base. :?

[Kris Kumar]

Originally Posted by hotdram

Maybe the logo should read:
"Cingular
Raising Prices"

~Rob

:rotfl:

[Sven]

Originally Posted by Mike Temporale

I'm not familiar with US prices, but I thought Cingular was already on the expensive side? This can't be good for current and future customer base. :?

They are actually fairly competative. They just lowered their all you can eat data to the same price as T-Mobile which had the best up until then. My wife and I just switched from T-Mo to Cingular, and with the family plan, a company discount, (our company has a discount with them, we don't work for them), we are actually paying less with Cingular. A big draw is the rollover minutes, where time not used one month rolls to the next.

Actually I think a no-cost offer for phone companies. I would guess that folks that don't use all their minutes each month typically never use all their minutes, and will never use the normal plus rollover.

My draw was coverage. It is area dependent to some degree, but on the average, ATT/Cingular seems to have the best coverage. It has improved my ability to make and receive calls where I go.

P.S. As far as I know, a contract is a contract, binding both ways. It's the new customers that will get hit.

[Mike Temporale]

Originally Posted by sven

P.S. As far as I know, a contract is a contract, binding both ways. It's the new customers that will get hit.

Are you on a contract? or are you just month to month? After your initial contract expires, most carriers (At least the ones I've used) switch you to month to month. So you're rate and features could change on you with little notice.

[nskgti]

The drop in profits is expected... Cingular is investing huge amounts of money in the merging the two companies... Systems, networks and operations are not a cheap thing to pick up and change...

[Sven]

Originally Posted by Mike Temporale

Are you on a contract? or are you just month to month?

Yea, currently I am. One nice thing is that the basic plan is the contract. I can add and drop features at will, like data. I actually signed up at $25/mo for data and when they dropped the price, I just called them and they adjusted. I could have cancelled and re-added, and they knew that, but were very pleasant to deal with. I know they wouldn't have changed it on their own though.