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To: T L Comiskey who wrote (37451)	7/31/1999 8:43:00 PM
From: Ruffian	Read Replies (3) \| Respond to of 152472

AT&T> From the August 2, 1999, issue of Wireless Week AT&T Grappling With Growth By Monica Alleven Growth comes at a cost, and AT&T Wireless Services Inc. is proving that with Digital One Rate. The carrier, which doubled its 1999 infrastructure spending to $2 billion, last week boasted 1.5 million Digital One Rate customers. Wireless revenue was up 42 percent in the second quarter, coming on the heels of the first quarter's 40 percent. Net additions totaled 473,000, up 46 percent over last year, and average revenue per unit grew to $66. But so far this year, the carrier added 43 cell sites and 6,100 radios--the equivalent to the Seattle network's scope--to boost coverage and improve capacity in Manhattan, where complaints about blocked and dropped calls have been particularly onerous. And engineers there aren't done yet. Before the end of the year, AT&T Wireless will add another 67 cell sites and 4,600 radios to keep up with the demand for Digital One Rate, the all-inclusive roaming and long-distance plan that triggered new pricing for the industry. All this while AT&T Wireless pays steep roaming rates for customers. Yet the carrier says it's sticking to its plan to grow like mad and steal market share from competitors, even though it may cost dearly in the short term. AT&T Wireless President Dan Hesse told analysts during a conference call last week the carrier can outperform and produce a better income statement, top to bottom, than its competitors. Second-quarter earnings before interest, taxes, depreciation and amortization excluding other income was $329 million, up 18.3 percent from the year-ago quarter. Going forward this year, that percentage should continue in the mid- to high teens, he said. EBITDA, also called operating cash flow, is a standard performance measurement. More net additions usually lead to lower cash flows, which historically is the case in the fourth quarter, when carriers spend more on marketing to attract new customers during the holidays. Most new personal communications services carriers don't even have positive cash flows. Sprint PCS, which added a record 617,000 subscribers in the second quarter, had an operating cash flow loss of $338 million. However, enhanced specialized mobile radio carrier Nextel Communications Inc., a relatively new player, last month boasted its second consecutive quarter of positive operating cash flow. Analysts said it's difficult to compare AT&T Wireless, which is not a separate trading stock, to PCS or pure cellular carriers because AT&T is a combination of both. Still, questions persist about the profitability of Digital One Rate, given the roaming and other expenses attached to it. AT&T Wireless continues to negotiate rates and launch more of its own markets, but as it is now, pays anywhere from 30 to 60 cents or more per minute for roaming; customers pay AT&T Wireless only about 10 or 20 cents per minute. Of course, if industrywide consolidation continues and AT&T Wireless ends up buying its roaming partners, it won't have to worry about those rates.