--ot AirTouch Net Income Soars Company Adds Nearly One Million Proportionate Customers -- -- Global Operations In Total
Now Reach Over 31 Million Customers -- -- Pro Forma Operating Cash Flow Margins Hit a
Record 40 Percent --
SAN FRANCISCO--(BUSINESS WIRE)--July 22, 1998-- Demonstrating again the success of its global strategy, AirTouch
Communications (NYSE:ATI - news) today reported that second quarter pro forma net income applicable to common
stockholders rose 107 percent to $147 million ($0.25 per share) compared to pro forma net income of $71 million ($0.13) in
the same period last year.
In order to better compare year-over-year growth, results in this discussion have been presented on a pro forma basis as if the
acquisition of MediaOne Group's U.S. wireless interests had occurred on January 1, 1997.
During the quarter ended June 30, 1998, the company, based on its proportionate ownership in its many ventures, added
955,000 worldwide cellular, paging, and PCS customers, 32 percent more than the second quarter 1997. International cellular
ventures added a record 573,000 proportionate customers, contributing 60 percent of the company's new customers.
AirTouch serves 15.1 million proportionate worldwide customers, up 35 percent from the same period last year.
''Once again we have produced an uninterrupted string of excellent results, proving that execution counts,'' said Sam Ginn,
AirTouch chairman and chief executive officer. ''We continue to demonstrate the importance of giving customers the products
and services they want at competitive prices, and as a result, remain the world's largest wireless company based on over 31
million total venture customers.''
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Second Quarter Total Company Proportionate Highlights
(All changes compared to second quarter of 1997)
-- Cellular and PCS ventures added 866,000 customers, a 32-percent
increase. Worldwide the company's cellular and PCS ventures
reached 11.7 million customers, a 44-percent increase.
-- AirTouch paging operations added nearly 90,000 units in service,
reaching 3.3 million, a 9-percent increase.
-- Service and other revenues increased 21 percent to $1.8 billion.
-- Operating cash flow (operating income plus depreciation and
amortization) was $718 million, a 34-percent rise.
-- Despite the strong subscriber growth, operating cash flow margins
were a record 40 percent compared to 36 percent.
-- Capital expenditures were flat at $379 million.
-- Acquisition amortization expense net of taxes and primarily
related to the amortization of intangibles associated with the
MediaOne Group transaction was about $68 million, without which
EPS would have been $0.37.
Proportionate U.S. Cellular & PCS
By aggressively managing costs and leveraging scale, AirTouch's
U.S. cellular operations generated proportionate operating cash flow
margins greater than 48 percent. Monthly cash cost per customer was
down a significant 16 percent over the year earlier quarter, due to
the company's ability to lower customer selling costs and keep churn
at low levels.
AirTouch met customer demand for wireless services with
innovative pricing plans backed by top-notch networks and world-class
customer care. The company added 253,000 proportionate customers
during the quarter, reaching 7.3 million proportionate U.S. cellular
customers, up 25 percent over the second quarter 1997.
As consumer awareness of the benefits of digital has increased so
has demand for AirTouch's digital offering. During the second quarter
the company added 179,000 digital cellular customers, bringing its
total CDMA/TDMA customers to 536,000, approximately 7 percent of its
U.S. cellular customer base. More important, around 30 percent of peak
minutes of use are now digital.
AirTouch's PCS partnership, PrimeCo, continued on track. In
total, PrimeCo added almost 90,000 customers, reaching a customer base
of nearly 600,000. AirTouch's proportionate share of PrimeCo's total
customers is 282,000.
Proportionate International Cellular
With lower-priced service plans driving increased penetration,
wireless demand in AirTouch's international ventures exploded. During
the quarter, the company added a record 573,000 proportionate
international customers, crossing the four million customer mark only
six years after AirTouch's first international venture, Mannesmann
Mobilfunk, launched service in Germany. The popularity of prepaid
offerings, a pay-as-you-go cellular service now available in all
AirTouch European markets, accounted, on a proportionate basis, for 47
percent of the quarter's international gains and 25 percent of
international customers.
Despite the customer growth, strong profitability continued due
to increasing scale, a focus on cost control, and proactive efforts
that drove churn below historically low levels. Proportionate
operating cash flow for the quarter rose to $277 million, 85 percent
more than the second quarter 1997. Proportionate operating cash flow
margins were an impressive 39 percent, compared to 30 percent in the
same period last year.
AirTouch's share of distributions from its international ventures
in Germany, Sweden, and Portugal cumulative-to-date totaled $308
million.
U.S. Paging
AirTouch's U.S. paging operations turned in strong second quarter
results, delivering both growth and profitability. A strategic focus
on working with select retailers paid off as the company added 88,000
units in service, up 28 percent over the year earlier quarter.
Operating cash flow rose 7 percent to $30 million compared to second
quarter 1997.
Increased economies of scale resulting from sales teaming efforts
between AirTouch's cellular and paging operations contributed to the
quarter's success. AirTouch Paging returned to AirTouch Communications
about $30 million in cash through the first half of 1998 and continues
to be the only large paging company that is profitable and free cash
flow positive.
1998 Outlook
"AirTouch has generated very strong performance in the first half
of 1998," said Ginn. "Buoyed by what we see as a continuing strong
demand for wireless products and services and the ability of our
international ventures to continue to aggressively add customers, we
expect to exceed our 1998 goal and add more than 3 million
proportionate global cellular and PCS customers. Despite the strong
growth, we still expect our total company proportionate operating cash
flow to grow about 25 percent over the prior year's pro forma $2.1
billion. 1998 proportionate capital expenditures should be up about 5
percent over 1997 pro forma to $1.9 billion capital expenditures."
AirTouch is attaching a high priority to preparing the company's
mission critical systems for processing dates beyond December 31,
1999. The company does not expect the Year 2000 issue to affect its
1998 guidance and is currently estimating that incremental
consolidated pre-tax expenses associated with this issue to be
incurred between now and the end of 1999 will be about $75 million.
AirTouch Communications, based in San Francisco, is the largest
wireless company in the world. AirTouch owns interests in cellular,
paging, and personal communications services in the United States,
Belgium, Egypt, Germany, India, Italy, Japan, Poland, Portugal,
Romania, South Korea, Spain and Sweden, as well as an interest in the
Globalstar satellite system. Based on its ownership share of its
global ventures, the company serves 15 million proportionate customers
(over 31 million total venture customers) including those acquired
through the April 6 MediaOne Group transaction.
Note Regarding Pro Forma Data:
The pro forma proportionate data included in the earnings release
reflect the MediaOne Group merger as if it had been effective on
January 1, 1997, and after giving effect to the purchase method of
accounting and other merger-related adjustments. These pro forma
proportionate data are not necessarily indicative of the future
results of operations of the combined Company or the results of
operations of the combined Company that would have actually occurred.
Given the significance of the merger, the Company believes that it is
more meaningful to show comparative results on such pro forma basis.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: Except for the historical information presented,
the matters discussed in this release are forward-looking statements
and are subject to risks and uncertainties that could cause actual
results to differ materially. Such factors include: a change in
economic conditions in the various markets served by the Company's
operations which would adversely affect the level of demand for
wireless services; greater-than-anticipated competitive activity
requiring reduced pricing and/or new product offerings or resulting in
higher customer selling costs; declining average revenue per customer
due to an increasing proportion of consumer customers and declining
rates; greater-than-expected growth in customers and usage driving
increased investment in network capacity; the level of fraudulent
activity; the impact of new business opportunities requiring
significant up-front investments; the impact on capital spending from
the deployment of new technologies; the possibility that technologies
will not perform according to expectations or that vendor performance
will not meet requirements; and higher than anticipated costs
associated with correcting the Year 2000 problem. These and other
factors related to the business are described in the Company's SEC
filings, including in its 10-K under "Investment Considerations" and
the quarterly reports on Form 10-Q.
For a copy of this or other AirTouch press releases, please call
1-800-344-7531 or visit the AirTouch web site at www.airtouch.com. |
