Cingular adds 1.8 million subs

In what is amounting to a good quarter for wireless carriers, Cingular announced today it has added 1.8 million wireless subscribers in the fourth quarter of 2005, driven by its efforts to keep its monthly churn rate in check.

Cingular ended the year with 54.1 million subscribers, staving off, for now, the challenge of Verizon Wireless, which has been reporting quarter after quarter of record net subscriber adds. Verizon, however, stole some of Cingular’s limelight, preempting its own Q4 earnings call, scheduled for Thursday, with its own new record: 2 million net adds, an industry record in the U.S. Verizon Wireless is now 2.8 million customers behind Cingular, but it is steadily closing the gap. Verizon added 7.5 million subs in 2005 compared with Cingular’s 5 million.

Cingular attributed much of this quarter’s success to its recent churn efforts. The operator managed to halt the wave of defections it experienced after acquiring AT&T Wireless last year, bringing its churn rate down to 2.1%, compared with the 2.6% rate of the combined carriers a year ago. Cingular’s average monthly revenue per user, however, fell 1.3% compared with last year’s fourth quarter. Cingular’s ARPU has been steadily declining over the last three quarters, from $50.43 in Q2 to $49.65 in Q3 to $48.86 last quarter. Part of the reason for the declining numbers could be due to its improving resale and MVNO business. Of the 1.8 million subs added in Q4, nearly 1 million of them came from resale.

Financially, Cingular did well. It posted a fourth-quarter profit of $204 million after recording $495 million loss the same quarter a year ago when it was finalizing its AT&T Wireless acquisition. Revenues also increased 24% over the same period to $8.85 billion. The latest round of earnings help drive Cingular into the black for the year—it ended 2005 with $333 million in profits, compared to 2004 combined earnings of $201 million for the then separate AT&T Wireless and Cingular.

One particular bright spot on Cingular’s earning sheet is its continuously increasing data ARPU, which rose to $4.71 a month, a 63% increase over last year a 9% increase quarter-over-quarter. Data now accounts for 9.6% of Cingular’s monthly revenues, bringing it almost to the high-water mark Sprint hit earlier this year but fell below after acquiring Nextel Communications.