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Item from SD Union-Tribune
by: channelwatcher (42/M/mx)
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Qualcomm spinoff posts 165% Leap in revenue
By Mike Drummond
STAFF WRITER
June 23, 1999
Weathering stormy economic times in Russia and rebounding from a partner's financial woes in Chile, Leap
Wireless International's revenues rose to $2.9 million for the third quarter ended May 31, a jump of 165
percent over the previous quarter.
The San Diego-based spinoff of Qualcomm posted a net loss of $42.2 million, or $2.35 per share, compared
with a net loss of $7.9 million for the same period last year.
The figures were "entirely in line with our forecasts and expectations," said Jim Seines, Leap's
investor-relations manager.
Leap was part of Qualcomm in the third quarter of 1998 and didn't go public until September, so there are
no per-share comparisons for last year.
The widening losses are signs that Leap is growing. Telecommunications companies typically take several
years, at least, to build out networks and start seeing profits.
Leap deploys wireless phone networks based on Qualcomm's code division multiple access, or CDMA,
technology.
The company added more than 10,000 wireless subscribers in the third quarter, boosting its total to about
42,400.
The numbers could have been bigger had it not been for the financial troubles of Chilean partner
Telex-Chile, which was being hounded by creditors and unable to fund its half of Chilesat PCSs. In April,
Leap paid $50 million to buy out the remaining half of the joint Chilesat PCS venture.
Leap said it is "working to re-energize" Chilesat by adding more management in Chile and jump-starting
marketing efforts that were stalled during the acquisition.
On other international fronts, Leap reported its Mexican Pegaso PCS venture had 2,800 wireless
subscribers in Tijuana. Leap owns a third of Pegaso, which plans to roll out wireless service in Monterrey,
Guadalajara and Mexico City.
And after delaying deployment of wireless systems in Russia, Leap said its Metrosvyaz venture signed up
270 subscribers in St. Petersburg and is in negotiation with 25 other mostly state-owned or -controlled
telecom operators to deploy more networks later this year.
Domestically, Leap is plotting how it will spread coverage in areas where it owns 36 wireless licenses,
bought for $18.7 million at auction in April. The licenses encompass territories from Alaska to Arkansas,
representing 11.2 million potential customers.
Just how many of those customers Leap will lure depends on how it spreads its network, Seines said.
Leap also is awaiting Federal Communications Commission approval to buy two licenses from AirGate in
North Carolina and South Carolina. The Small Business Administration and others oppose Leap's
acquisition, arguing that as a virtual arm of giant Qualcomm, Leap does not qualify as a so-called designated
entity or small business eligible for preferential pricing and payment terms.
On Wall Street yesterday, Leap closed down 183/4 cents at $19.25.
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