Centennial courts the Caribbean market

In the last 18 months, Centennial Communications (www.centennialcom.coml) has launched wireless operations in the Dominican Republic and in the U.S. Virgin Islands. In addition, the company provides wireless services in Puerto Rico and plans to launch in Jamaica before the end of the year.

During a Sept. 20 earnings teleconference, Centennial’s president and CEO Michael Small said the company plans to differentiate itself with the Caribbean wireless services.

“We are running (the Caribbean operations) as one marketplace. We think there’s great power in doing that,” Small said. “We will be the only competitor in the Caribbean to have all the islands under a common technology, a common footprint. That’s what’s going to differentiate us in the region relative to the other competitors, who use it as an appendage to other footprints, not a primary focus.”

According to Centennial, the company’s Caribbean wireless licenses cover 11.4 million POPs.

During the 3-month period ending Aug. 31, the company’s Caribbean subscribers increased by 52% compared to last year, according to Peter Chehayl, Centennial Communications senior vice president, treasurer and chief financial officer. The increase brings Centennial’s Caribbean subscriber total to approximately 300,600 subscribers.

However, Chehayl reported a monthly prepaid and post-paid churn figure of 4.7% for the quarter compared to last year’s first-quarter figures. He attributed the high churn rate to a recent change in the way the company calculates churn. The company previously tabulated post-paid churn only. Now, pre-paid and post-paid deactivations are added and the total is divided by the number of subscribers that were active at the beginning of a month.

“Churn goes up using this method, because prepaid customers have a higher tendency to churn,” Chehayl said. “However, we believe this calculation gives a more accurate view of the business.”

Prepaid customers represent 35% of Centennial’s Caribbean subscriber base, Chehayl said, compared to its U.S. operations, where prepaid customers are 5% of subscribers. “While we believe in the need for prepaid wireless plans, we will continue to emphasize the profitable postpaid plans in the U.S. and Puerto Rico markets,” he said.

Centennial also reported much higher airtime usage and slightly higher ARPU in its Caribbean operations, compared to U.S. ARPU and airtime usage. The company’s Caribbean ARPU per month for the quarter was $63, compared to $60 in U.S. ARPU. The average Caribbean customer used 479 minutes of airtime per month during the quarter, compared to U.S. average monthly usage of 169 minutes.

Small attributed the differences between usage and ARPU in the Caribbean and U.S. markets to Centennial being the dominant wireless player in the Caribbean, as opposed to the United States, where there are five wireless carriers in some of its markets.