AT&T Wireless, Nextel post strong 3Q results

Wireless carrier stocks were given life today as AT&T Wireless and Nextel Communications reported solid results.

Shares of AT&T Wireless were up 18.35%, or $1.00, trading at $6.45 per share this afternoon. Nextel was up 22 cents, or 2.16%, to trade at $10.42. Even Sprint PCS, which reported negative net subscriber additions last week, was up 54 cents, or 17.59%, trading at $3.61.

While AT&T Wireless struggled with the large number of disconnected customers associated with WorldCom bowing out of the wireless reseller business, it managed to add 201,000 customers during the quarter. Cingular Wireless recently announced negative net subscriber additions because of the customer fallout surrounding WorldCom.

“Without WorldCom, we might have grown by half a million customers, but then, if pigs could fly,” AT&T Wireless CEO John Zeglis told analysts during its third-quarter conference call. “In an economy that has still not recovered and with spending soft, we are not disappointed that that we grew the company by about 200,000.”

AT&T Wireless executives were happy to say that the company grew quality customers and not through lowering credit scores or offering prepaid plans, a trick many operators use to make up for subscriber shortfalls toward the end of the quarter.

Revenues reached $4.06 billion during the third quarter, up from $3.5 billion the previous year. Net loss was $2.05 billion, or 76 cents per share, compared with a net profit of $77 million, or 3 cents per share, in 2001. The net loss was attributed to a $2.3 billion non-cash charge from accounting changes. Excluding the charge, net profits were $131 million, or 4 cents per share.

Nextel Communications delivered 480,000 net new customers for the third quarter, and recorded a $526 million profit compared with a year-ago loss of $209 million. Revenue increased 26% to $2.3 billion, from $1.8 billion the previous year.

“We are simultaneously driving EBITDA margins by creating operating efficiencies in the business, and we have instilled a more disciplined approach to capital spending,” said CFO Paul Saleh in a company statement.

Analysts now are waiting for growth results from T-Mobile and Verizon Wireless, both of which are expected to post strong subscriber additions. T-Mobile, which recently launched service in California with aggressive pricing, could report as many as 1 million customers new customers, analysts say. Verizon led the industry in subscriber additions during the second quarter.