Subject: [NEXTEL-1] AT&T Wireless Posts Loss, Revs Rise

From: Marcel <[email-masked]>
Date: Wed, 29 Jan 2003 14:37:00 -0500

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030128/tc_nm/telecoms_attwireless_earns_dc_4

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Technology - Reuters

AT&T Wireless Posts Loss, Revs Rise

Tue Jan 28, 4:33 PM ET

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By Yukari Iwatani

NEW YORK (Reuters) -

AT&T Wireless Services Inc. (NYSE:AWE - news),
the third-largest U.S. wireless telephone company, on Tuesday
posted a much narrower quarterly loss, and revenue jumped about
15 percent as it added more customers than Wall Street analysts
expected.

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Business Front

But AT&T Wireless' stock price fell 4.5 percent as the
company introduced a new, low-priced calling plan and said its
2003 services revenues would grow only 5 percent to 7 percent,
analysts said. Service revenues rose 15.6 percent last year.

"In a slowing subscriber growth environment, in a
competitive pricing environment, it's likely that the 5-7
percent revenue growth will decline to the low single digits
thereafter," said Peter Friedland, a telecommunications analyst
with WR Hambrecht and Co.

Still, the Redmond, Washington-based company said it
expects to achieve free cash flow in 2003 and it will pare its
capital spending by partnering with rival Sprint Corp. (NYSE:FON - news)
(NYSE:PCS - news) to share the costs of building new wireless
transmission towers.

"It sounds like AT&T is describing a strategy that is
better than how the industry has acted in the past. They say
they're going to balance growth with profit," said Thomas Lee,
telecommunications analyst with J.P. Morgan.

AT&T Wireless, which hosted a meeting with analysts and
investors in New York, said it would focus on gaining more
high-spending corporate customers, and encourage subscribers to
use data products such as short messaging services, which
transmit short text messages.

The company added 705,000 customers during the quarter,
readily beating analysts' expectations of 600,000 to 650,000.
AT&T Wireless had 20.859 million customers at the end of 2002.
The fourth quarter is the industry's strongest season because
consumers buy mobile phone as holiday gift.

"The numbers may not be as hot as they were in the
white-hot 1990s, but compared with many of their peers and
compared to the industry in general during the same period, the
results were solid and comforting," said independent
telecommunications analyst Jeffrey Kagan.

LOW-PRICE PLAN SPOOKS INVESTORS

Despite indications that AT&T Wireless gained market share
during the fourth quarter, analysts said the stock dropped on
profit-taking, and investors' concern about its new GoPhone
service that will not require customers to sign long-term
contracts or pay deposits.

(Story continues after advertisement)

Shares of AT&T Wireless shed 30 cents to close at $6.40 on
the New York Stock Exchange (news - web sites), where it was the third most-active
stock. The stock has fallen about 46 percent over the past 12
months.

Carriers such as Sprint PCS Group (PCS.N) have been burned
by low-priced calling plans that attracted customers who failed
to pay their bills or committed fraud. Investors feared that
GoPhone could attract a similar customer base, but AT&T
Wireless said it expects GoPhone to represent only a small
percentage of its new customers.

"It's an example of what you've got to do if you're going
to (push) the U.S. penetration beyond 60 percent to create
valuable customers. We're not betting the company on it this
year," said AT&T Wireless Chairman John Zeglis.

The U.S. wireless industry has been seeing slowing
subscriber growth after years of frenetic gains. Nearly half of
Americans now own cell phones, and competition has intensified
as some companies have dropped their prices to draw customers
away from rivals.

AT&T Wireless announced the GoPhone service, along with
several other partnership agreements to help it cut costs or
expand sales. It said it would offer wireless data services in
airports and hotels starting in mid-February. AT&T Wireless
GoPort is already available at the Denver International
Airport.

It also forged an agreement with privately held Bechtel
Corp. to lower costs of network expansion, as well as a
distribution agreement with Dell Computer Corp. (NasdaqNM:DELL - news) and a
partnership with International Business Machines Corp. (NYSE:IBM - news)
to create integrated wireless services for mobile
professionals.

SUBSCRIBER-GROWTH TOPS FORECASTS

In the fourth quarter, AT&T Wireless had a net loss of $131
million, or 5 cents a share, compared with a loss of $1.2
billion, or 48 cents a share, a year ago.

Total revenues rose 14.7 percent to $4.047 billion, as
wireless service revenue rose 15.3 percent to $3.738 billion on
a larger customer base. AT&T Wireless' average revenue per
customer declined 1.3 percent to $60 a month.

The company also said its 2002 revenue beat that of No. 2
Cingular Wireless (NYSE:BLS - news) (NYSE:SBC - news), making it the
second-largest wireless firm in terms of revenue. AT&T
Wireless' average revenue per customer declined 1.3 percent to
$60.00 a month.

AT&T Wireless said fourth-quarter subscriber growth, which
topped expectations, would have been even stronger if it hadn't
lost customers from wholesale partner WorldCom Inc. (Other OTC:WCOEQ - news),
when the bankrupt carrier exited the wireless-retail business
this summer.

Cingular Wireless lost customers for the quarter as it
failed to keep up with its rivals' offers, but No. 1 Verizon
Wireless (NYSE:VZ - news) and No. 6 T-Mobile USA (DTEGn.DE) posted more
customers than expected, adding about 970,000 and 1 million
respectively. Sprint PCS (PCS.N) and Nextel Communications Inc.
(NasdaqNM:NXTL - news) will report results in February.

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