Update: Cingular announced fourth quarter 2004 earnings this evening, and if you read between the lines, things are not looking that great for the company, explaining why it is getting a weebit desperate and going shopping. So here is the bottom line – the churn increased marginally 2.8 percent, the net new adds shot up 642,000 but the average revenue per user took a nose dive. ARPU for the quarter was $49, down from $52 from the previous quarter. I am not sure about the others, but 6 percent decline does not look too good. Despite the sharp increase in the number of net adds, overall revenues increased only 5.9% to $3.7 billion. The margins fell to 23 percent from 26%. “ARPU coupled with higher gross adds, increased advertising, and WLNP costs made the EBITDA line look pretty nasty,” says our favorite wireless analyst, Greg Gorbatenko of When2Trade. He predicts that other wireless players will also be under similar margin pressure. I agree mostly with everything Greg says, but I am more bullish about the prospects of Verizon Wireless. Anyway Cingular’s results show that the merger with AT&T is not a luxury, but a necessity. (Yahoo link to Earnings Press Release)
Now compare this to AT&T Wireless earnings this morning. AT&T reported a flat ARPU of $60, revenues were flat and within expectations. However the company lost 128,000 customers and the churn rate shot up to 3.3% from 2.4%. That is not good at all. It shows that despite bad news, AT&T Wireless’ corporate customers always come through for them, and that is what Cingular desperately wants.