Subject: [NEXTEL-1] Is Nextel's Boost a BUST? CHURN as High as %9.2 Per Month!

From: Marcel <[email-masked]>
Date: Fri, 18 Apr 2003 12:22:51 -0400

Q1 2003 Boston Communications Group Earnings Conference Call - Final

April 17, 2003 2:11pm

OPERATOR: Good afternoon. My name is Amanda, and I will be your conference facilitator. At
this time I would like to
welcome everyone to the BCGI First Quarter Earnings Release Conference Call. All lines
have been placed on mute to prevent
any background noise. After the speakers' remarks there will be a question and answer
period. If you would to ask a question
during that time simply press "star" and the "1" on your telephone keypad. If you would
like to withdraw your question press
"star", then the number "2". Thank you Ms. Ziegler you may begin your conference.

ALISON ZIEGLER, FRB/WEBER SHANDWICK: Good afternoon. By now you should have had a chance
to view today's press
release. If anyone still needs a copy, please call us at 212-445-8453 and request a fax or
email. Alternatively you can view in
down at the release at the Boston Communication Group corporate website at www.bcgi.net.
On the line with us today are E.Y.
Snowden, President and CEO, and Karen Walker, Chief Financial Officer of Boston
Communications Group. Please note that
management is happy to speak privately with investors and analysts regarding overall
strategy, industry trends, and historical
issues. However, more specific questions regarding updates on financial guidance or other
material information, will only be
discussed on widely disseminated press releases or via open conference calls, such as the
one being held today.

I'd also like to caution everyone that various remarks that the company may make about the
company's future expectations,
plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor
provisions under the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially from those
indicated by these forward-looking
statements, as a result of various important factors, including those discussed in the
Form 10-K for the year-ended December
31, 2002, which is on file with the SEC. In addition any forward-looking statements
represent our views only as of today, April
16th, 2003, and should not be relied upon as representing our views as of any subsequent
date. While we may elect to update
forward-looking statements at some point in the future, we specifically disclaim any
obligation to do so, even if our estimates
change, and therefore you should not rely on these forward-looking statements as
representing our views as of any subsequent
date to check. Now without further delay I'd like to turn the call over to E.Y. Snowden.
Please go ahead, E.Y.

<SNIP>==============================================================================

GREG GORBATENKO: Well, after following you guys for almost four years, this is one of the
best quarters
I have seen so that's-- congratulations, I think is necessary here.

EDWARD SNOWDEN: Thank you.

KAREN WALKER: Thank you.

GREG GORBATENKO: You bet. How is Boost going? We haven't heard a lot about it out there.
Can you
just maybe touch on that quickly, then I will ask some more questions.

EDWARD SNOWDEN: Sure, and always I can talk to you about what our carrier customers have
said
publicly. In the case of Boost and Nextel, Tom Kelly, the Chief Operating Officer of
Nextel described to
their investors after their year-end conference call -- as part of the conference call
discussion, that he
thought it was doing well. That he described over 30,000 new subscribers in the course of
less then less
then three months in business. If you describe and compare that ratably in terms of
penetration over a given
period of time, it compares very favorably to many of the prepaid programs that they might
consider to be
competing again. I think some off -- not off the record -- on the record discussion
comments included a
comment about the profitability of the team subscriber being better than average. So, it
sounds like good
things. Those are all the kinds of color, I can give you with regard to the program. We
obviously know much
more than that in terms of details, but [inaudible].

GREG GORBATENKO: Okay, and Karen what was -- I know you probably said it but I missed it.
What was
churn for this quarter?

KAREN WALKER: About 8%.

GREG GORBATENKO: 8%. And what was it at the end of the year last year?

KAREN WALKER: The fourth quarter was 9.2% per month. What, you know, looks like little bit
better churn
and so I'm assuming that -- helped on the strong net adds, but you probably had some
strong gross adds
too.

KAREN WALKER: That's right.

GREG GORBATENKO: [To get higher that number]. You did break out in the cautionary language
about the
80% coming from Cingular and Verizon. Is that---can I assume that the subs were about 80%
too, coming
from those two?

KAREN WALKER: No you really can't, because of the various pricing structures. Obviously --
our carriers
that have more subscribers are generating more minutes of use and therefore getting down
to lower tiered
pricing. So on average there pricing is lower than customers that have fewer subscribers.
So its not--
mathematically you can't do it that way.

GREG GORBATENKO: Can you give us any color on that?

KAREN WALKER: I can't because as we talked before we can't disclose any information of the
carriers
having publicly disclosed.

GREG GORBATENKO: Well let me tell on my thought process, you can say yes or no. I would
think that
the bulk of the [gross] adds would be coming from Verizon and [Cingular] simply they have
been launching
these new programs and your other stuff is [inaudible] legacy business -- is that -- do
you think that is a
safe assumption?

EDWARD SNOWDEN: No, not really, the Nextel and Alltel businesses are brand new for us, so
there was
nothing there [a] legacy, and they are all about new [growth]. They have not given
specific highlights other
than that. Tom [Kelly commented I] mentioned the 30000 subs by year-end.

KAREN WALKER: Yes as I mentioned in my comments Greg that our growth did not trail off at
the end of
Q1 like it has in the past after the holidays. And that was because, both our legacy
carriers that we had on
our platform for a long time, as well as new carriers -- all had nice propulsion going
into the later part of the
quarter.

GREG GORBATENKO: Were they transfer business or new business?

KAREN WALKER: New business in general, the new contracts that we signed last year.

EDWARD SNOWDEN: And specific I think someone asked already and Karen described zero
conversion.
So its all organic growth. That's what I'm looking for, okay.

KAREN WALKER: Yes.

GREG GORBATENKO: Okay and then I guess I'll close up with the last two questions kind of,
where do
you see pricing going,I know its constantly sliding,I think it's [like] 20%
year-over-year, something like that
may be I am off, but I am just trying to get the...?

KAREN WALKER: Yes --

GREG GORBATENKO: And then cash balances, I know, that you guys are doing a lot of
investing and you
are clearly growing the business, but is there a point in time where we will start to see
the cash balance
climb?

KAREN WALKER: Yes. To answer both your questions, I had mentioned in the notes that we
expect
pricing to go down at about 18 to 20% year-over-year.

GREG GORBATENKO: It's pretty close.

KAREN WALKER: Little higher than what I guided last quarter, which was about 15 to18% so,
up at the
higher end [or] a little over that. And that's principally because, as our growth has
accelerated, the carriers
have taken advantage of the price discount.

GREG GORBATENKO: Is there an end to that -- that pricing slide?.

EDWARD SNOWDEN: I mean here is the reality, right Greg.

GREG GORBATENKO: Yes.

EDWARD SNOWDEN: The great news is our declining in prices are a function of, as Karen has
described,
the tier pricing we give carriers that tier pricing takes full account of our cost
structure which is very fixed.
So our margins actually go up, as their pricing goes down. But all Karen is saying is the
time has been
compressed, so a percentage change on a year-over-year basis we are going to give a higher
number
because we just compress may be two quarters of growth into one, or three quarters into
one with all the
adds and usage such that both our margin went up, like we hadn't expected, and our pricing
discounts are
going to be faster.

GREG GORBATENKO: That's helpful and then the cash balances Karen?

KAREN WALKER: Yes I talked about our free cash flow will be at breakeven in Q2, and
generate about
$2m in the third quarter and another 2m in the fourth quarter. So our CAPEX expenditure
with the purchase
of the building is obviously impacting that in the short-term, but in the long term that
will continue to grow.

GREG GORBATENKO: Super, okay great quarter thanks.

EDWARD SNOWDEN: Thanks Greg.

OPERATOR: Once again if you would like to ask a question please press "star" "1" on your
telephone
keypad. The next question comes from Greg Spiko (ph.) with Pilot Advisors.

GREG SPIKO, ANALYST, PILOT ADVISORS: Hi I just wanted to see if we can get a update on
contract
negotiations with Verizon? [Figure I'd] give it a shot.

EDWARD SNOWDEN: Yes I just gave some on the note in my speech and that was that we have
began
the customary contract renewal process with Verizon.

GREG SPIKO: Okay and if you can share any thoughts you may have on the impact of
potentially lower
pricing on the contract?

EDWARD SNOWDEN: I think Karen has given guidance on pricing all of which is contemplating
what we
presume to happen during the year.

GREG SPIKO: Okay. Thanks.

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