Cingular Wireless Reports Strong First-Quarter 2006 Results
21 April 2006
Cingular Wireless LLC, which is a joint venture between AT&T Inc. (NYSE: T) and BellSouth Corporation (NYSE: BLS), today reported strong first-quarter results driven by its best-ever postpaid and overall churn, solid net and gross customer additions, continued progress on merger initiatives, growth of data ARPU, and sales to enterprise customers.
For the quarter, the nation's largest wireless provider reported overall monthly subscriber churn of 1.9 percent, its lowest ever. This represents an improvement of 30 basis points over the year-ago first quarter and a sequential improvement of 20 basis points. Postpaid churn improved by 30 basis points both year-over-year and sequentially to 1.6 percent, another record low.
Driven by lower churn and solid gross adds, Cingular also reported 1.7 million net customer additions. This compares to 1.4 million net additions in the year-ago first quarter and to 1.8 million in the fourth quarter of 2005.
Retail customers accounted for more than 1 million of the net adds for the quarter, including a sequential improvement of more than 41 percent in postpaid customers. Cingular's popular GoPhone(R) prepaid offers continued to attract more customers to our retail stores. Net adds also reflect Cingular's national distribution agreement with RadioShack.
Gross additions were 4.7 million, which was flat versus the year-ago first quarter and compares to 5.1 million in the fourth quarter of 2005.
Cingular ended the first quarter of 2006 with 55.8 million cellular/PCS subscribers, an increase of 5.5 million over the year-ago first quarter.
Cingular's data ARPU was $5.22, up more than 41 percent over the year-ago first quarter and nearly 11 percent sequentially. The company's Business Markets Group signed more than 800 new and renewed high-end service contracts in the quarter.
Normalized OIBDA margins* for the first quarter of 2006 were 31.9 percent, an improvement of 640 basis points compared to normalized year-ago first quarter results and is a sequential improvement of 90 basis points.
"Cingular got out of the gate fast in the first quarter of 2006," said Stan Sigman, the company's president and chief executive officer. "We continue to move in the right direction on our major metrics - churn, customer additions, margins, revenue growth, and more.
"In particular, our continuing improvement in churn is directly related to the investments and enhancements we are making in our network, day in and day out, in cities and towns all around the country. No other wireless company invests more in its network than Cingular does. Customers experience these improvements for themselves, and as a result, not only buy from Cingular but stay with Cingular.
"Our first-quarter results are a tribute once again to the creativity, dedication, and hard work of the men and women of Cingular, who continue to build the most highly regarded wireless company in the world."
Cingular's continued strong showing in net and gross customer additions can be attributed to a number of factors, including continuously improving service quality as the company rationalizes and integrates its networks in markets around the country, "fewest dropped calls" and "raising the bar"(TM) marketing campaigns that reinforce service improvements, and a steady stream of innovative products, services, and sponsorships.
In addition, the company continued to transition its customer base to GSM and move former AT&T Wireless customers to Cingular plans.
During the first quarter of 2006, 97 percent of minutes were carried on Cingular's GSM network and 89 percent of the company's subscriber base was GSM-equipped.
Cingular operates the nation's largest digital voice and data network. GSM is the world's most widely used wireless technology. Through roaming alliances with other GSM-based providers around the world, Cingular provides the largest global presence of any U.S. wireless carrier, with voice coverage in more than 180 countries.
Financial Results
- In the first quarter of 2006, Cingular's revenues were $9.0 billion, an
improvement of 9.1 percent over revenue for the year-ago first quarter
and 1.5 percent versus the fourth quarter of 2005.
- Average revenue per user (ARPU) in the first quarter of 2006 was
$48.48, which was down 2.3 percent from the year-ago first quarter
(when ARPU declined 3.3 percent year over year) and down 0.8 percent
versus the fourth quarter of 2005. Impacts on ARPU primarily reflect
an increase in the number of wholesale customers in Cingular's base.
These impacts were largely offset by a continued increase in data ARPU.
- ARPU from data services continued its strong growth in the first
quarter of 2006, increasing by more than 41 percent to $5.22 compared
to the year-ago first quarter and nearly 11 percent compared to the
fourth quarter of 2005. This growth was spurred by the increasing
popularity of downloadable games, ringtones, mobile instant messaging,
mobile email, photo messaging, and media bundles. In addition, text
messaging continued to grow. In the first quarter of 2006, Cingular
had more than 25 million active data customers, and delivered
91 million multi-media messages and 6.8 billion text messages.
- Cingular's 2006 reported first-quarter operating expenses were
$8.2 billion, which included merger-related integration costs of
$234 million. In addition, operating expenses included $359 million in
non-cash amortization of intangibles as part of the merger with
AT&T Wireless.
- Reported OIBDA margin was 31.1 percent, the highest since the merger
and the fifth straight quarter of sequential OIBDA improvement. At
31.9 percent, normalized OIBDA margin was also the highest since the
merger. This is an improvement of 640 basis points compared to the
year-ago fourth quarter and a sequential improvement of 90 basis
points.
- Reported operating income for the first quarter of 2006 was
$807 million, which compares to $114 million in the year-ago first
quarter and to $549 million in the fourth quarter of 2005. Normalized
operating income was $1.4 billion, which compares to $710 million in
the year-ago first quarter and to $1.3 billion in the fourth quarter
of 2005.
- Reported net income was $354 million, which compares to a net loss of
$240 million in the year-ago first quarter and to $204 million of net
income in the fourth quarter of 2005. Normalized net income was
$849 million, which compares to $258 million in the year-ago first
quarter and to $811 million of normalized net income in the fourth
quarter of 2005.
- Capital expenditures for first quarter were $1.4 billion. These were
driven by, among other developments, continued progress in merger
integration, the rollout of UMTS/HSDPA 3G technology, and improvements
in network coverage and quality in markets around the country.
First-quarter highlights and initiatives
- In the first quarter of 2006, the company announced the availability of
Cingular Video, an on-demand streaming video service with a large
selection of popular mobile content. Cingular Video lets consumers
watch video clips of their favorite TV shows, sports, news, weather,
entertainment, and premium content on their 3G-capable Cingular phones.
- Underscoring the power of its technology, Cingular became the first
wireless carrier in the world to complete a mobile data call using a
3.6Mbps (megabits per second) HSDPA device on its commercial
3G network.
- The company introduced the ultra-slim Motorola SLVR L7, which offers
such features as iTunes (including up to seven hours of music or 100
songs), a VGA camera, video capture and playback, 512 megabytes of
optional expandable memory, and more.
- Cingular unveiled "Live Idol Ringtones" through which many of the
actual live performances of finalists on the spectacularly popular
American Idol will be available on the following day exclusively to
Cingular customers. The company expects to top the 41.5 million text
messages it handled during the show last year.
- Cingular's Business Markets Group continued to introduce innovative new
products and services. For example, it announced Cingular
OfficeReach(TM), an integrated communications management solution that
allows businesses to administer their wireline and wireless services
as one system to help control costs and increase productivity. Also
debuting in the first quarter were the Cingular 2125 Smartphone and
Cingular 8100 series Pocket PCs with integrated WiFi, the Option
GlobeTrotter GT MAX LaptopConnect card -- the first commercially
available global 3G device of its kind -- and Dell Latitude (TM)
notebooks that come with built-in access to Cingular's 3G-based
BroadbandConnect service.
- The Business Markets Group also announced with Lenovo that ThinkPad
notebook computers configured with the Cingular UMTS/HSDPA-based 3G
technology will be introduced later this year. It also plans to debut
in the second quarter new Cingular GlobalConnect plans, which feature
unlimited domestic data usage with PC modem cards on the company's
BroadbandConnect and EDGE networks in the United States and 100MB of
wireless data usage for international travel.
- The Business Markets Group also signed more than 800 new and renewed
high-end service contracts during the first quarter of 2006.
These included business and government accounts such as
CH2M Hill Companies Inc., City of San Antonio, Seton Hall University,
State of New Jersey, Telzuit Medical Technologies, Inc., Tulane
University, Villanova University, Westchester University, and
Washington Group International.
Conference Call with Investment Community
Cingular will hold a conference call with the investment community beginning at 10 a.m. ET today. During the call, we will discuss our operational and financial results and prospects.
The conference call will be webcast and archived on our website at http://www.cingular.com/investor for 30 days, as well as on the websites of AT&T Inc. and BellSouth Corporation. Our first-quarter news release and downloadable financial statements are also available on that website.
Dial-in information for the conference call is as follows:
Domestic: 866-406-3487
International: 630-691-2771
Replay: 877-213-9653
(Domestic)
Replay: 630-652-3041
(International)
Passcode: 14019047#
Replays will be available for five days.
* OIBDA margin is operating income (loss) before depreciation and amortization, divided by total service revenues. OIBDA margins and comparative calculations mentioned in the news release reflect normalization for merger-related integration costs.
About Cingular Wireless
Cingular Wireless is the largest wireless carrier in the United States, serving 55.8 million customers. Cingular, a joint venture between AT&T Inc. (NYSE: T) and BellSouth Corporation (NYSE: BLS), has the largest digital voice and data network in the nation -- the ALLOVER(TM) network -- and the largest mobile-to-mobile community of any national wireless carrier. Cingular is a leader in third generation wireless technology. Its 3G network is the first widely available service in the world to use HSDPA (High Speed Downlink Packet Access) technology. Cingular is the only U.S. wireless carrier to offer Rollover(R), the wireless plan that lets customers keep their unused monthly minutes. Details of the company are available at http://www.cingular.com/. Get Cingular Wireless press releases emailed to you automatically. Sign up at http://cingular.mediaroom.com/.
FORWARD-LOOKING INFORMATION
In addition to historical information, this document and the conference call referred to above may contain forward-looking statements regarding events and financial trends. Factors that could affect future results and could cause actual results to differ materially from those expressed or implied in the forward-looking statements include:
-- the pervasive and intensifying competition in all markets where
Cingular operates;
-- failure to quickly realize capital and expense synergies from the
acquisition of AT&T Wireless as a result of technical, logistical,
regulatory and other factors;
-- delays or inability of vendors to deliver hardware, software, handsets
or network equipment, including failure to deliver such equipment free
of claims, including patent claims, of other parties;
-- problems associated with the transition of Cingular's network to
higher-speed technologies;
-- slow growth of Cingular's data services due to lack of popular
applications, terminal equipment, advanced technology and other
factors;
-- sluggish economic and employment conditions in the markets Cingular
serves;
-- the final outcome of FCC proceedings, including rulemakings, and
judicial review, if any, of such proceedings;
-- enactment of additional state and federal laws, regulations and
requirements pertaining to Cingular's operations; and
-- the outcome of pending or threatened complaints and litigation.
Such forward-looking information is given as of this date only, and Cingular assumes no duty to update this information.
Cingular Wireless LLC Income Statement - amounts in millions (unaudited)
Quarter Ended
3/31/2006 3/31/2005 % Change
Operating revenues:
Service revenues $8,005 $7,419 7.9%
Equipment sales 975 810 20.4%
Total operating revenues 8,980 8,229 9.1%
Operating expenses:
Cost of services 2,320 2,144 8.2%
Cost of equipment sales 1,327 1,295 2.5%
Selling, general and administrative 2,846 3,001 (5.2%)
Depreciation and amortization 1,680 1,675 0.3%
Total operating expenses 8,173 8,115 0.7%
Operating income 807 114 607.9%
Interest expense 297 338 (12.1%)
Minority interest expense 41 16 156.3%
Equity in net income of affiliates - 2 (100.0%)
Other income (expense), net 9 20 (55.0%)
Income (loss) before income tax provision 478 (218) 319.3%
Provision for income taxes 124 22 463.6%
Net income (loss) $354 ($240) 247.5%
Selected Financial and Operating Data for Cingular Wireless - amounts in
millions, except customer data in 000s
Quarter Ended
3/31/2006 3/31/2005 % Change
(Amounts in millions, except customer
data in 000s)
OIBDA(1) $2,487 $1,789 39.0%
OIBDA margin(2) 31.1% 24.1% 700 BP
Total Cellular/PCS Customers(3) 55,810 50,350 10.8%
Net Customer Additions - Cellular/PCS 1,679 1,367 22.8%
M&A Activity, Partitioned Customers
and/or Other Adjs. (13) (149)
Churn - Cellular/PCS(4) 1.9% 2.2% -30 BP
ARPU - Cellular/PCS(5) $48.48 $49.60 (2.3%)
Minutes Of Use Per Cellular/PCS
Subscriber(6) 698 628 11.1%
Licensed POPs - Cellular/PCS(7) 296 293 1.0%
Penetration - Cellular/PCS(8) 19.8% 17.7% 11.9%
Capital Expenditures $1,441 $971 48.4%
Reconciliations of GAAP Financial Measures to Non-GAAP Financial
Measures - amounts in millions (unaudited)
Quarter Ended
3/31/2006 3/31/2005 % Change
Net income (loss) $354 ($240) 247.5%
Plus: Interest expense 297 338 (12.1%)
Plus: Minority interest expense 41 16 156.3%
Plus: Equity in net income of affiliates - (2) (100.0%)
Plus: Other, net (9) (20) (55.0%)
Plus: Provision for income taxes 124 22 463.6%
Operating income 807 114 607.9%
Plus: Depreciation and amortization 1,680 1,675 0.3%
OIBDA(1) $2,487 $1,789 39.0%
NM - Not Meaningful
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as
calculated in accordance with GAAP, in that it excludes depreciation
and amortization. It differs from net income (loss), as calculated in
accordance with GAAP, in that it excludes, as presented on our
Consolidated Statement of Income: (1) depreciation and amortization,
(2) interest expense, (3) minority interest expense, (4) equity in net
income (loss) of affiliates, (5) other, net, and (6) provision
(benefit) for income taxes. OIBDA does not give effect to cash used
for debt service requirements and thus does not reflect available
funds for distributions, reinvestment or other discretionary uses.
OIBDA is not presented as an alternative measure of operating results
or cash flows from operations, as determined in accordance with
generally accepted accounting principles. Our calculation of OIBDA,
as presented, may differ from similarly titled measures reported by
other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller
agreements.
(4) Cellular/PCS churn is calculated by dividing the aggregate number of
cellular/PCS customers who cancel service during each month in a
period by the total number of cellular/PCS customers at the beginning
of each month in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period
divided by average cellular/PCS customers during the period.
(6) Effective with the 1Q05 reporting period, the Total Minutes of Use Per
Cellular/PCS Subscriber (MOUs) definition has been revised to exclude
SMS activity, but retains the prior revision to include Local Minutes
of Use and Outcollect Minutes of Use in the numerator. Prior to 1Q05,
the numerator includes Local Minutes of Use.
(7) Licensed POPs refers to the number of people residing in areas where
we and our partners have licenses to provide cellular or PCS service,
including areas where we have not yet commenced service.
(8) Penetration calculation for 1Q06 is based on licensed "operational"
POP's of 282 million.
Cingular Wireless LLC
Reconciliation of Reported Results to Normalized Results
(amounts in millions)
Quarter Ended March 31, 2006 Normalized Items
AWE
Integra- Amorti-
tion zation Normal-
GAAP Costs(1) Expense(2) ized
Operating revenues:
Service revenues $8,005 $- $- $8,005
Equipment sales 975 - - 975
Total operating revenues 8,980 - - 8,980
Operating expenses:
Cost of services 2,320 (18) - 2,302
Cost of equipment sales 1,327 - - 1,327
Selling, general and administrative 2,846 (46) - 2,800
Depreciation and amortization* 1,680 (170) (359) 1,151
Total operating expenses 8,173 (234) (359) 7,580
Operating income 807 234 359 1,400
Interest expense 297 - - 297
Minority interest expense 41 - - 41
Equity in net income of affiliates - - - -
Other income (expense), net 9 - - 9
Income before income tax provision 478 234 359 1,071
Provision for income taxes 124 39 59 222
Net income $354 $195 $300 $849
Notes to Normalized Financial Data
Our normalized earnings have been adjusted for the following:
(1) Integration costs resulting from the Cingular acquisition of
AT&T Wireless and the related tax effect.
(2) Amortization expense associated with intangible assets recorded for
the AT&T Wireless acquisition and the related tax effect.
Cingular Wireless LLC Income Statement, NORMALIZED - amounts in millions
(unaudited)
Quarter Ended
3/31/2006 3/31/2005 % Change
Operating revenues:
Service revenues $8,005 $7,419 7.9%
Equipment sales 975 810 20.4%
Total operating revenues 8,980 8,229 9.1%
Operating expenses:
Cost of services 2,302 2,141 7.5%
Cost of equipment sales 1,327 1,295 2.5%
Selling, general and administrative 2,800 2,899 (3.4%)
Depreciation and amortization 1,151 1,184 (2.8%)
Total operating expenses 7,580 7,519 0.8%
Operating income 1,400 710 97.2%
Interest expense 297 338 (12.1%)
Minority interest expense 41 16 156.3%
Equity in net income of affiliates - 2 (100.0%)
Other income (expense), net 9 20 (55.0%)
Income before income tax provision 1,071 378 183.3%
Provision for income taxes 222 120 85.0%
Net income $849 $258 229.1%
Selected Financial and Operating Data for Cingular Wireless - amounts in
millions, except customer data in 000s
Quarter Ended
3/31/2006 3/31/2005 % Change
(Amounts in millions, except customer
data in 000s)
OIBDA - normalized(1) $2,551 $1,894 34.7%
OIBDA margin - normalized(2) 31.9% 25.5% 640 BP
Total Cellular/PCS Customers(3)** 55,810 50,350 10.8%
Net Customer Additions - Cellular/PCS** 1,679 1,367 22.8%
M&A Activity, Partitioned Customers
and/or Other Adjs.** (13) (149)
Churn - Cellular/PCS(4)** 1.9% 2.2% -30 BP
ARPU - Cellular/PCS(5)** $48.48 $49.60 (2.3%)
Minutes Of Use Per Cellular/PCS
Subscriber(6)** 698 628 11.1%
Licensed POPs - Cellular/PCS(7)** 296 293 1.0%
Penetration - Cellular/PCS(8)** 19.8% 17.7% 11.9%
Capital Expenditures** $1,441 $971 48.4%
Reconciliations of Normalized Financial Measures to Normalized
OIBDA and OIBDA Margin - amounts in millions (unaudited)
Quarter Ended
3/31/2006 3/31/2005 % Change
Net income $849 $258 229.1%
Plus: Interest expense 297 338 (12.1%)
Plus: Minority interest expense 41 16 156.3%
Plus: Equity in net loss of affiliates - (2) 100.0%
Plus: Other, net (9) (20) 55.0%
Plus: Provision for income taxes -
normalized 222 120 85.0%
Operating income - normalized 1,400 710 97.2%
Plus: Depreciation and amortization -
normalized 1,151 1,184 (2.8%)
OIBDA - normalized(1) $2,551 $1,894 34.7%
OIBDA margin(2) 31.1% 24.1% 700 BP
Plus: OIBDA margin and integration 0.8% 1.4% -60 BP
OIBDA margin - normalized 31.9% 25.5% 640 BP
NM - Not Meaningful
** Denotes metrics and calculations in this chart that are not impacted
by the 1Q06 and YTD 2006 normalization of merger integration costs and
AT&T Wireless intangibles amortization expenses.
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as
calculated in accordance with GAAP, in that it excludes depreciation
and amortization. It differs from net income (loss), as calculated in
accordance with GAAP, in that it excludes, as presented on our
Consolidated Statement of Income: (1) depreciation and amortization,
(2) interest expense, (3) minority interest expense, (4) equity in net
income (loss) of affiliates, (5) other, net, and (6) provision
(benefit) for income taxes. OIBDA does not give effect to cash used
for debt service requirements and thus does not reflect available
funds for distributions, reinvestment or other discretionary uses.
OIBDA is not presented as an alternative measure of operating results
or cash flows from operations, as determined in accordance with
generally accepted accounting principles. Our calculation of OIBDA,
as presented, may differ from similarly titled measures reported by
other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller
agreements.
(4) Cellular/PCS churn is calculated by dividing the aggregate number of
cellular/PCS customers who cancel service during each month in a
period by the total number of cellular/PCS customers at the beginning
of each month in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period
divided by average cellular/PCS customers during the period.
(6) Effective with the 1Q05 reporting period, the Total Minutes of Use Per
Cellular/PCS Subscriber (MOUs) definition has been revised to exclude
SMS activity, but retains the prior revision to include Local Minutes
of Use and Outcollect Minutes of Use in the numerator.
Prior to 1Q05, the numerator includes Local Minutes of Use.
(7) Licensed POPs refers to the number of people residing in areas where
we and our partners have licenses to provide cellular or PCS service,
including areas where we have not yet commenced service.
(8) Penetration calculation for 1Q06 is based on licensed "operational"
POP's of 282 million.
Cingular Wireless LLC Income Statement - amounts in millions (unaudited)
Full Year
2002 3/31/03 6/30/03 9/30/03 12/31/03
Operating revenues:
Service revenues $13,922 $3,414 $3,643 $3,701 $3,559
Equipment sales 981 244 255 383 378
Total operating revenues 14,903 3,658 3,898 4,084 3,937
Operating expenses:
Cost of services 3,594 849 921 1,035 970
Cost of equipment sales 1,535 396 451 606 578
Selling, general and
administrative 5,429 1,218 1,271 1,442 1,497
Depreciation and amortization 1,849 488 508 521 572
Total operating expenses 12,407 2,951 3,151 3,604 3,617
Operating income (loss) 2,496 707 747 480 320
Interest expense 911 225 230 197 204
Minority interest expense 123 24 35 25 17
Equity in net income (loss) of
affiliates (274) (74) (78) (90) (91)
Other income (expense), net 29 26 7 4 4
Income (loss) before income tax
provision 1,217 410 411 172 12
Provision (benefit) for income
taxes 12 2 12 6 8
Net income (loss) $1,205 $408 $399 $166 $4
Cingular Wireless LLC Income Statement - amounts in millions (unaudited)
3/31/04 6/30/04 9/30/04 12/31/04
Operating revenues:
Service revenues $3,583 $3,833 $3,873 $6,313
Equipment sales 384 354 419 806
Total operating revenues 3,967 4,187 4,292 7,119
Operating expenses:
Cost of services 955 983 1,107 1,692
Cost of equipment sales 537 505 585 1,247
Selling, general and administrative 1,372 1,463 1,567 2,947
Depreciation and amortization 553 565 573 1,386
Total operating expenses 3,417 3,516 3,832 7,272
Operating income (loss) 550 671 460 (153)
Interest expense 198 199 200 303
Minority interest expense 27 41 20 (2)
Equity in net income (loss) of
affiliates (108) (95) (98) (114)
Other income (expense), net 4 1 - 11
Income (loss) before income tax
provision 221 337 142 (557)
Provision (benefit) for income taxes 6 (2) - (62)
Net income (loss) $215 $339 $142 $(495)
Cingular Wireless LLC Income Statement - amounts in millions (unaudited)
3/31/05 6/30/05 9/30/05 12/31/05 3/31/06
Operating revenues:
Service revenues $7,419 $7,719 $7,721 $7,779 $8,005
Equipment sales 810 890 1,025 1,070 975
Total operating revenues 8,229 8,609 8,746 8,849 8,980
Operating expenses:
Cost of services 2,144 2,293 2,464 2,417 2,320
Cost of equipment sales 1,295 1,230 1,203 1,341 1,327
Selling, general and
administrative 3,001 2,953 2,881 2,812 2,846
Depreciation and amortization 1,675 1,629 1,541 1,730 1,680
Total operating expenses 8,115 8,105 8,089 8,300 8,173
Operating income (loss) 114 504 657 549 807
Interest expense 338 326 304 292 297
Minority interest expense 16 41 38 7 41
Equity in net income (loss) of
affiliates 2 1 1 1 -
Other income (expense), net 20 33 10 1 9
Income (loss) before income tax
provision (218) 171 326 252 478
Provision (benefit) for income
taxes 22 24 104 48 124
Net income (loss) $(240) $147 $222 $204 $354
Selected Financial and Operating Data for Cingular Wireless - amounts in
millions, except customer data in 000s
Full Year
2002 3/31/03 6/30/03 9/30/03 12/31/03
OIBDA(1) $4,345 $1,195 $1,255 $1,001 $892
OIBDA margin(2) 31.2% 35.0% 34.4% 27.0% 25.1%
Integration, AT&T Wireless
Intangibles Amortization and
Hurricane Costs $- $- $- $- $-
OIBDA - normalized $4,345 $1,195 $1,255 $1,001 $892
OIBDA margin - normalized 31.2% 35.0% 34.4% 27.0% 25.1%
Total Cellular/PCS Customers(3) 21,925 22,114 22,640 23,385 24,027
Net Customer Additions -
Cellular/PCS 359 189 540 745 642
M&A Activity, Partitioned
Customers and/or Other Adjs. (32) - (14) - -
Churn - Cellular/PCS(4) 2.8% 2.6% 2.5% 2.8% 2.8%
ARPU - Cellular/PCS(5) $52.14 $51.07 $53.47 $52.80 $49.38
Minutes Of Use Per Cellular/PCS
Subscriber(6) 423 441 485 500 515
Licensed POPs - Cellular/PCS(7) 219 235 236 236 236
Penetration - Cellular/PCS(8) 10.1% 10.0% 10.2% 10.6% 10.8%
Total Cingular Interactive
Customers 817 835 788 788 789
Net Customer Additions - Cingular
Interactive 84 18 (47) 0 1
Capital Expenditures $3,085 $327 $668 $773 $966
Selected Financial and Operating Data for Cingular Wireless - amounts in
millions, except customer data in 000s
3/31/04 6/30/04 9/30/04 12/31/04
OIBDA(1) $1,103 $1,236 $1,033 $1,233
OIBDA margin(2) 30.8% 32.2% 26.7% 19.5%
Integration, AT&T Wireless Intangibles
Amortization and Hurricane Costs $- $- $43 $643
OIBDA - normalized $1,103 $1,236 $1,076 $1,478
OIBDA margin - normalized 30.8% 32.2% 27.8% 23.4%
Total Cellular/PCS Customers(3) 24,618 25,044 25,672 49,132
Net Customer Additions - Cellular/PCS 554 428 657 1,699
M&A Activity, Partitioned Customers
and/or Other Adjs. 37 (2) (29) 21,761
Churn - Cellular/PCS(4) 2.7% 2.7% 2.8% 2.6%
ARPU - Cellular/PCS(5) $48.30 $50.75 $50.25 $49.51
Minutes Of Use Per Cellular/PCS
Subscriber(6) 527 568 598 617
Licensed POPs - Cellular/PCS(7) 240 243 243 291
Penetration - Cellular/PCS(8) 10.9% 11.1% 11.4% 17.2%
Total Cingular Interactive Customers 768 735 653 NA
Net Customer Additions - Cingular
Interactive (21) (33) (82) NA
Capital Expenditures $334 $783 $634 $1,698
Selected Financial and Operating Data for Cingular Wireless - amounts in
millions, except customer data in 000s
3/31/05 6/30/05 9/30/05 12/31/05 3/31/06
OIBDA(1) $1,789 $2,133 $2,198 $2,279 $2,487
OIBDA margin(2) 24.1% 27.6% 28.5% 29.3% 31.1%
Integration, AT&T Wireless
Intangibles Amortization and
Hurricane Costs $596 $649 $733 $727 $593
OIBDA - normalized $1,894 $2,228 $2,443 $2,409 $2,551
OIBDA margin - normalized 25.5% 28.9% 31.6% 31.0% 31.9%
Total Cellular/PCS Customers(3) 50,350 51,442 52,292 54,144 55,810
Net Customer Additions -
Cellular/PCS 1,367 952 867 1,820 1,679
M&A Activity, Partitioned
Customers and/or Other Adjs. (149) 140 (17) 32 (13)
Churn - Cellular/PCS(4) 2.2% 2.2% 2.3% 2.1% 1.9%
ARPU - Cellular/PCS(5) $49.60 $50.51 $49.65 $48.86 $48.48
Minutes Of Use Per Cellular/PCS
Subscriber(6) 628 692 698 700 698
Licensed POPs - Cellular/PCS(7) 293 294 294 294 296
Penetration - Cellular/PCS(8) 17.7% 18.0% 18.3% 18.9% 19.8%
Total Cingular Interactive
Customers NA NA NA NA NA
Net Customer Additions - Cingular
Interactive NA NA NA NA NA
Capital Expenditures $971 $2,188 $1,346 $2,970 $1,441
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
- amounts in millions (unaudited)
Full Year
2002 3/31/03 6/30/03 9/30/03 12/31/03
Net income (loss) $1,205 $408 $399 $166 $4
Plus: Interest expense 911 225 230 197 204
Plus: Minority interest expense 123 24 35 25 17
Plus: Equity in net loss of
affiliates 274 74 78 90 91
Plus: Other, net (29) (26) (7) (4) (4)
Plus: Provision (benefit) for
income taxes 12 2 12 6 8
Operating income (loss) 2,496 707 747 480 320
Plus: Depreciation and
amortization 1,849 488 508 521 572
OIBDA(1) $4,345 $1,195 $1,255 $1,001 $892
Plus: Integration costs
(excluding depreciation and
amortization) - - - - -
Plus: Hurricane costs
(excluding depreciation and
amortization) - - - - -
OIBDA - normalized(1) $4,345 $1,195 $1,255 $1,001 $892
Service revenues 13,922 3,414 3,643 3,701 3,559
Less: Mobitex data revenues 189 55 53 54 58
Service revenues used to
calculate ARPU $13,733 $3,359 $3,590 $3,647 $3,501
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
- amounts in millions (unaudited)
3/31/04 6/30/04 9/30/04 12/31/04
Net income (loss) $215 $339 $142 $(495)
Plus: Interest expense 198 199 200 303
Plus: Minority interest expense 27 41 20 (2)
Plus: Equity in net loss of affiliates 108 95 98 114
Plus: Other, net (4) (1) - (11)
Plus: Provision (benefit) for
income taxes 6 (2) - (62)
Operating income (loss) 550 671 460 (153)
Plus: Depreciation and amortization 553 565 573 1,386
OIBDA(1) $1,103 $1,236 $1,033 $1,233
Plus: Integration costs (excluding
depreciation and amortization) - - 43 245
Plus: Hurricane costs (excluding
depreciation and amortization) - - - -
OIBDA - normalized(1) $1,103 $1,236 $1,076 $1,478
Service revenues 3,583 3,833 3,873 6,313
Less: Mobitex data revenues 58 59 54 36
Service revenues used to calculate ARPU $3,525 $3,774 $3,819 $6,277
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
- amounts in millions (unaudited)
3/31/05 6/30/05 9/30/05 12/31/05 3/31/06
Net income (loss) $(240) $147 $222 $204 $354
Plus: Interest expense 338 326 304 292 297
Plus: Minority interest expense 16 41 38 7 41
Plus: Equity in net loss of
affiliates (2) (1) (1) (1) -
Plus: Other, net (20) (33) (10) (1) (9)
Plus: Provision (benefit) for
income taxes 22 24 104 48 124
Operating income (loss) 114 504 657 549 807
Plus: Depreciation and
amortization 1,675 1,629 1,541 1,730 1,680
OIBDA(1) $1,789 $2,133 $2,198 $2,279 $2,487
Plus: Integration costs
(excluding depreciation and
amortization) 105 95 149 110 64
Plus: Hurricane costs
(excluding depreciation and
amortization) - - 96 20 -
OIBDA - normalized(1) $1,894 $2,228 $2,443 $2,409 $2,551
Service revenues 7,419 7,719 7,721 7,779 8,005
Less: Mobitex data revenues 18 20 18 17 14
Service revenues used to
calculate ARPU $7,401 $7,699 $7,703 $7,762 $7,991
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as
calculated in accordance with GAAP, in that it excludes depreciation
and amortization. It differs from net income (loss), as calculated in
accordance with GAAP, in that it excludes, as presented on our
Consolidated Statement of Income: (1) depreciation and amortization,
(2) interest expense, (3) minority interest expense, (4) equity in net
income (loss) of affiliates, (5) other, net, and (6) provision
(benefit) for income taxes. OIBDA does not give effect to cash used
for debt service requirements and thus does not reflect available
funds for distributions, reinvestment or other discretionary uses.
OIBDA is not presented as an alternative measure of operating results
or cash flows from operations, as determined in accordance with
generally accepted accounting principles. Our calculation of OIBDA,
as presented, may differ from similarly titled measures reported by
other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller
agreements.
(4) Cellular/PCS churn is calculated by dividing the aggregate number of
cellular/PCS customers who cancel service during each month in a
period by the total number of cellular/PCS customers at the beginning
of each month in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period
divided by average cellular/PCS customers during the period.
(6) Prior to 1Q05, the numerator includes Local Minutes of Use.
(7) Licensed POPs refers to the number of people residing in areas where
we and our partners have licenses to provide cellular or PCS service,
including areas where we have not yet commenced service. Licensed POPs
have been restated in periods 4Q04 through 2Q05 due to a
reconciliation of respective licenses.
(8) Penetration calculation for 1Q06 is based on licensed "operational"
POP's of 282 million.
Cingular Wireless LLC Income Statement, Normalized - amounts in millions
(unaudited)
The normalized financial data presented below exclude the impact of:
1) integration costs that are cash outlays, or specified non-cash charges,
directly related to the acquisition of AT&T Wireless; 2) amortization of
intangibles associated with the AT&T Wireless acquisition; and 3) costs
related to impact of Hurricanes Katrina and Rita in the third and fourth
quarters of 2005.
Integration costs would not have been incurred if not for the acquisition,
as they support the utilization and/or disposal of the acquired assets.
Integration costs are separately identifiable from business as usual
outlays. Costs recognized in connection with certain rationalization
plans approved by management have also been included beginning in the
second quarter of 2005.
Examples of merger integration costs impacting expenses include (but are
not limited to) the following:
* Network rationalization (write-offs and accelerated depreciation
related to certain "overlap" network assets)
* Sales distribution optimization (lease terminations, leasehold
improvement write-offs/accelerated depreciation)
* Workforce rationalization (severance, relocation, retention)
IT System/Application rationalization (system/platform consolidation,
contract termination fees, third party support)
* Real Estate space rationalization (lease terminations, leasehold
improvements write-offs and accelerated depreciation, contract
termination fees)
Normalized
12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06
Operating revenues:
Service revenues $6,313 $7,419 $7,719 $7,721 $7,779 $8,005
Equipment sales 806 810 890 1,025 1,070 975
Total operating
revenues 7,119 8,229 8,609 8,746 8,849 8,980
Operating expenses:
Cost of services 1,685 2,141 2,274 2,285 2,326 2,302
Cost of equipment sales 1,244 1,295 1,230 1,203 1,341 1,327
Selling, general and
administrative 2,712 2,899 2,877 2,815 2,773 2,800
Depreciation and
amortization 988 1,184 1,075 1,053 1,133 1,151
Total operating
expenses 6,629 7,519 7,456 7,356 7,573 7,580
Operating income 490 710 1,153 1,390 1,276 1,400
Interest expense 303 338 326 304 292 297
Minority interest expense (2) 16 41 38 7 41
Equity in net income
(loss) of affiliates (114) 2 1 1 1 -
Other income, net 11 20 33 10 1 9
Income before income tax
provision 86 378 820 1,059 979 1,071
Provision for income taxes 39 120 131 224 168 222
Net income $47 $258 $689 $835 $811 $849
Selected Financial and Operating Data for Cingular Wireless -
amounts in millions, except customer data in 000s
Normalized
12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06
OIBDA(1) (in millions) $1,478 $1,894 $2,228 $2,443 $2,409 $2,551
OIBDA margin(2) 23.4% 25.5% 28.9% 31.6% 31.0% 31.9%
Total Cellular/PCS
Customers(3) (000's) 49,132 50,350 51,442 52,292 54,144 55,810
Net Customer Additions -
Cellular/PCS (000's) 1,699 1,367 952 867 1,820 1,679
M&A Activity, Partitioned
Customers and/or Other
Adjs. (000's) 21,761 (149) 140 (17) 32 (13)
Churn - Cellular/PCS(4) 2.6% 2.2% 2.2% 2.3% 2.1% 1.9%
ARPU - Cellular/PCS(5) $49.51 $49.60 $50.51 $49.65 $48.86 $48.48
Reconciliations of Normalized Financial Measures to Normalized
OIBDA and Service Revenues - amounts in millions (unaudited)
Normalized
12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06
Net income $47 $258 $689 $835 $811 $849
Plus: Interest expense 303 338 326 304 292 297
Plus: Minority interest
expense (2) 16 41 38 7 41
Plus: Equity in net
(income) loss of
affiliates 114 (2) (1) (1) (1) -
Plus: Other, net (11) (20) (33) (10) (1) (9)
Plus: Provision for
income taxes 39 120 131 224 168 222
Operating income 490 710 1,153 1,390 1,276 1,400
Plus: Depreciation and
amortization 988 1,184 1,075 1,053 1,133 1,151
OIBDA(1) $1,478 $1,894 $2,228 $2,443 $2,409 $2,551
Service revenues 6,313 7,419 7,719 7,721 7,779 8,005
Less: Mobitex data
revenues 36 18 20 18 17 14
Service revenues used to
calculate ARPU $6,277 $7,401 $7,699 $7,703 $7,762 $7,991
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as
calculated in accordance with GAAP, in it excludes depreciation and
amortization. It differs from net income (loss), as calculated in
accordance with GAAP, in that it excludes, as presented on our
Consolidated Statement of Income: (1) depreciation and amortization,
(2) interest expense, (3) minority interest expense, (4) equity in net
income (loss) of affiliates, (5) other, net, and (6) provision
(benefit) for income taxes. OIBDA does not give effect to cash used
for debt service requirements and thus does not reflect available
funds for distributions, reinvestment or other discretionary uses.
OIBDA is not presented as an alternative measure of operating results
or cash flows from operations, as determined in accordance with
generally accepted accounting principles. Our calculation of OIBDA,
as presented, may differ from similarly titled measures reported by
other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller
agreements.
(4) Cellular/PCS customer churn is calculated by dividing the aggregate
number of cellular/PCS customers who cancel service during each month
in a period by the total number of cellular/PCS customers at the
beginning of each month in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period
divided by average cellular/PCS customers during the period.
Cingular Wireless LLC Income Statement, Prior Quarter Normalized
Reconciliations - amounts in millions (unaudited)
Three months ended Three months ended
9/30/04 12/31/04
Normal- Normal-
ized Normal- ized Normal-
GAAP Expen- ized GAAP Expen- ized
Results ses Results Results ses Results
Operating revenues:
Service revenues $3,873 $- $3,873 $6,313 $- $6,313
Equipment sales 419 - 419 806 - 806
Total operating revenues 4,292 - 4,292 7,119 - 7,119
Operating expenses:
Cost of services 1,107 (1) 1,106 1,692 (7) 1,685
Cost of equipment sales 585 - 585 1,247 (3) 1,244
Selling, general and
administrative 1,567 (42) 1,525 2,947 (235) 2,712
Depreciation and amortization 573 - 573 1,386 (398) 988
Total operating expenses 3,832 (43) 3,789 7,272 (643) 6,629
Operating income 460 43 503 (153) 643 490
Interest expense 200 - 200 303 - 303
Minority interest expense 20 - 20 (2) - (2)
Equity in net income (loss) of
affiliates (98) - (98) (114) - (114)
Other income (expense), net - - - 11 - 11
Income (loss) before income
tax provision 142 43 185 (557) 643 86
Provision (benefit) for income
taxes - - - (62) 101 39
Net income (loss) $142 $43 $185 $(495) $542 $47
Three months ended Three months ended
3/31/05 6/30/05
Normal- Normal-
ized Normal- ized Normal-
GAAP Expen- ized GAAP Expen- ized
Results ses Results Results ses Results
Operating revenues:
Service revenues $7,419 $- $7,419 $7,719 $- $7,719
Equipment sales 810 - 810 890 - 890
Total operating revenues 8,229 - 8,229 8,609 - 8,609
Operating expenses:
Cost of services 2,144 (3) 2,141 2,293 (19) 2,274
Cost of equipment sales 1,295 - 1,295 1,230 - 1,230
Selling, general and
administrative 3,001 (102) 2,899 2,953 (76) 2,877
Depreciation and amortization 1,675 (491) 1,184 1,629 (554) 1,075
Total operating expenses 8,115 (596) 7,519 8,105 (649) 7,456
Operating income 114 596 710 504 649 1,153
Interest expense 338 - 338 326 - 326
Minority interest expense 16 - 16 41 - 41
Equity in net income (loss) of
affiliates 2 - 2 1 - 1
Other income (expense), net 20 - 20 33 - 33
Income (loss) before income
tax provision (218) 596 378 171 649 820
Provision (benefit) for income
taxes 22 98 120 24 107 131
Net income (loss) $(240) $498 $258 $147 $542 $689
Three months ended Three months ended
9/30/05 12/31/05
Normal- Normal-
ized Normal- ized Normal-
GAAP Expen- ized GAAP Expen- ized
Results ses Results Results ses Results
Operating revenues:
Service revenues $7,721 $- $7,721 $7,779 $- $7,779
Equipment sales 1,025 - 1,025 1,070 - 1,070
Total operating revenues 8,746 - 8,746 8,849 - 8,849
Operating expenses:
Cost of services 2,464 (179) 2,285 2,417 (91) 2,326
Cost of equipment sales 1,203 - 1,203 1,341 - 1,341
Selling, general and
administrative 2,881 (66) 2,815 2,812 (39) 2,773
Depreciation and amortization 1,541 (488) 1,053 1,730 (597) 1,133
Total operating expenses 8,089 (733) 7,356 8,300 (727) 7,573
Operating income 657 733 1,390 549 727 1,276
Interest expense 304 - 304 292 - 292
Minority interest expense 38 - 38 7 - 7
Equity in net income (loss) of
affiliates 1 - 1 1 - 1
Other income (expense), net 10 - 10 1 - 1
Income (loss) before income
tax provision 326 733 1,059 252 727 979
Provision (benefit) for income
taxes 104 120 224 48 120 168
Net income (loss) $222 $613 $835 $204 $607 $811
Nine months ended Twelve months ended
9/30/04 12/31/04
Normal- Normal-
ized Normal- ized Normal-
GAAP Expen- ized GAAP Expen- ized
Results ses Results Results ses Results
Operating revenues:
Service revenues $11,289 $- $11,289 $17,602 $- $17,602
Equipment sales 1,157 - 1,157 1,963 - 1,963
Total operating
revenues 12,446 - 12,446 19,565 - 19,565
Operating expenses:
Cost of services 3,045 (1) 3,044 4,737 (8) 4,729
Cost of equipment sales 1,627 - 1,627 2,874<
Source: prnewswire
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