Cingular Wireless LLC, the nation's largest cell phone provider, reported a $240 million loss in the first quarter despite solid growth in subscribers and revenue. It also said Wednesday it cut 1,500 to 1,600 employee jobs in the three-month period.
The loss reported by the Atlanta-based joint venture of BellSouth Corp. and SBC Communications Inc. for the three months ending March 31 compares to a profit of $215 million for the same period a year ago. The year-ago figure assumes Cingular and AT&T Wireless Services Inc. were a single company, although Cingular's $41 billion purchase of AT&T Wireless was not completed until October 2004.
Revenue in the January-March quarter was $8.23 billion, compared to $3.97 billion a year ago. The prior-year revenue figure includes only Cingular's sales.
In a conference call, Chief Financial Officer Pete Ritcher said that Cingular reduced its full-time head count by 4,700 during the quarter, including 1,500 to 1,600 employees. The remaining job losses involved contractors and other non-Cingular workers.
In November, Chief Executive Stan Sigman told The Associated Press that Cingular would cut about 10 percent of its 68,000 to 70,000 jobs — primarily from administrative ranks — over 12 to 18 months starting Jan. 1. Including the most recent cuts, Cingular's work force currently numbers 68,700, spokesman Mark Siegel said.
Ritcher said Wednesday that the cost-cutting will continue as Cingular seeks to maximize efficiency and AT&T Wireless is more fully integrated. Lower-performing storefronts may also be closed.
In an interview, Ritcher said Cingular expects to turn a profit for all of 2005, despite its first quarter loss.
"I don't have a specific quarter to go and point to you right now, but as we progress through the year we anticipate you will see that bottom line become positive," Ritcher said. "I think the strong customer growth we've had was a pleasant surprise to us."
Cingular said it added 1.4 million net subscribers in the first quarter, raising its total to 50.4 million and keeping it ahead of No. 2 provider Verizon Wireless, which had 43.8 million subscribers through the end of last year. Verizon Wireless hasn't reported its first-quarter earnings yet.
Telecom analyst Jeff Kagan said the subscriber numbers bode well for Cingular long-term. He said competitors who sought to take business from Cingular as it absorbed AT&T Wireless did not appear to have been successful.
Average revenue per user in the quarter was $49.59, a 2.7 percent increase from $48.30 a year ago. The prior-year figure excludes AT&T Wireless. Average monthly churn — the rate at which customers switch to other providers — fell to 2.2 percent in the quarter from 2.7 percent a year ago. The prior-year figure also excludes AT&T Wireless.
Cingular noted that direct acquisition integration costs increased its operating expenses by $105 million in the first quarter.