VoiceStream reports customer growth, higher net loss

(Telephony) VoiceStream Wireless added 484,700 new customers during the first quarter but its net loss increased as a result of higher operating costs. The company had net losses equal to $651.2 million--more than three times the $203.3 million loss for the first quarter last year--which represented a $2.54 per share loss.

This was not such a surprise as analysts had been expecting the carrier to post a loss of $2.56 per share. VoiceStream blamed the integration of its acquired operations and an increase in its marketing expenses for its hefty operating costs, which increased to $1.21 billion from $377.6 million during the same quarter last year.

“Integration of three companies into one business is not easy. Becoming national is not easy,” said John Stanton, chairman and CEO of VoiceStream. “We were in an integration race. Now, we are the only carrier on a single standard, with a single brand, billing system and customer care platform—not Verizon, Cingular or AT&T, all of whom went through significant acquisitions as well.”

During the quarter, the carrier expanded its service footprint to include Chicago and Milwaukee and plans to launch St Louis during the second quarter. The carrier has 97% coverage of the U.S., including the top 50 markets, Stanton said.

“In the last two years, we have transformed VoiceStream from a regional to a national player, and we continue to grow the footprint.”

Like other carriers, VoiceStream remains focused on next-generation services and the issue of adequate spectrum. At this point, the carrier has spectrum covering about 86% of the U.S.

“Spectrum is a national challenge, and we question whether more will be allocated by the government in the next two years,” Stanton said. However, Stanton believes VoiceStream is “well positioned to operate with our current spectrum…our data standard will allow us to gracefully add packet data capacity without limiting spectrum capacity for customers.”

Sticking with its goal of moving its wireless Internet strategy forward, the carrier has announced two new wireless data applications: Ping Pong, a youth-oriented wireless email service; and iStream, a high-speed data and Internet-access service that will use the carrier’s GPRS network and work at speeds of 28 kbps to 56 kbps to provide always-on functionality. Both will become commercial in the second and third quarters, said Bob Stapleton, president and COO of VoiceStream.

The carrier will begin marketing the new services during the second and third quarters, with plans to accelerate its efforts during the fourth quarter as compelling new devices become available, Stapleton said.

“There are handsets now, but we are waiting for the strongest mix we can put out into the marketplace,” he said.

The carrier is looking beyond simple devices and is more interested in larger screens.

“This is what will cause the services to come alive,” Stapleton said. “We are optimistic we will see them in the fourth quarter.”

VoiceStream also reconfirmed that its merger with Deutsche Telekom will be finalized later this month.

“We believe the Deutsche Telekom merger is great deal for VoiceStream shareholders,” Stanton said. “The company has a great business in Germany and is an extraordinary and undervalued franchise.”