Earnings are out. Any thoughts? Here's the details:
Posts $172.5 Million in Total Revenue, $54.1 Million in the 4th Quarter
BETHESDA, Md., March 22 -- Personal Communications Services(PCS) provider Omnipoint Corporation (Nasdaq: OMPT) today announced financial results for 1998. Total revenue for 1998 was $172.5 million, more than tripling 1997's revenue of $52 million. Revenue for the fourth quarter of 1998 was $54.1 million, an increase of 129 percent from 1997's fourth quarter revenue of $23.7 million. Of the Corporation's 1998 total revenue, $167.7 million was from Omnipoint Communications Services, LLC (OCS) and its affiliates which operate the Corporation's PCS networks, and $4.8 million was from Omnipoint Technologies, Inc. (OTI), the Corporation's technology development subsidiary. For OCS, total 1998 revenue consisted primarily of $141.1 million of net service revenues, a 359 percent increase from 1997's net service revenues of $30.8 million. OCS had $52.6 million in revenue in the fourth quarter, and an EBITDA loss of $87.3 million. OTI contributed revenues of $1.5 million in the fourth quarter. OTI's operating loss combined with all operating expenses at the parent Corporation resulted in an incremental EBITDA loss of $10.7 million for the fourth quarter. OTI's revenues and losses are consolidated for accounting purposes, though it is not anticipated that OTI will require any cash from the parent Corporation for the foreseeable future due to financing arrangements with strategic partners.
Omnipoint reported a loss, before the extraordinary item related to the return and restructuring of "C-block" licenses and including accounting adjustments during the fourth quarter related to the treatment of the joint operating arrangement in Wichita, of $645.7 million, or $12.27 per share, for 1998 ($12.87 per share after an adjustment of $0.13 per share related to Wichita, $0.21 per share for the C-block restructuring, and $0.26 per share for the Convertible Preferred deposit account accretion per GAAP). This compares to a loss of $314.4 million, or $6.10 per share, for 1997. For the fourth quarter of 1998, the loss was $195.9 million, or $3.71 per share, ($3.91 after the adjustments for Wichita and the Convertible Preferred deposit account treatment). The accounting for the Wichita joint operating arrangement required an adjustment in the fourth quarter due to delays in receiving certain regulatory approvals. The Corporation expects the approvals to be received shortly which would reduce the Corporation's share of the losses related to the operating arrangement.
The Corporation ended the year with over 378,000 total subscribers, of
which approximately 370,000 were managed, and approximately 8,000 were
proportionate. The Corporation added approximately 103,000 managed subs and 4,000 proportionate subs during the fourth quarter. "Subscriber growth in the fourth quarter was substantially higher than the consensus forecast," noted OCS President George Schmitt. "This accounted for the bulk of the increase in marketing, customer care and operating expenses. Our average subscriber run rate was $46 per month during the fourth quarter(with an average of 309,000 managed subscribers during the quarter) and $50 for all of 1998. As previously noted, our customer acquisition costs per gross addition temporarily spiked to roughly $490 in the fourth quarter due to holiday advertising, as well as marketing and distribution costs that carried over into activations for January. Based on preliminary results, January's customer acquisition costs were under $400 per gross add." The Company marketed to approximately 37 million POPs during the fourth quarter, before launching the Detroit and Indianapolis markets during the last week of December. "Even after placing the Great Lakes and Indianapolis regions into service, our CAPEX per covered POP remains the lowest in the industry at $23, with network CAPEX in service below $20," added Schmitt. "While these markets introduced certain start up expenses that were recorded in the fourth quarter, both markets are ahead of plan so far in 1999." The launch of these two regions completed the four region build during 1998 that also saw the launch of New England and Southern Florida at the end of the first quarter. Omnipoint also continued to expand and improve its existing digital wireless coverage along the Northeast in the New York region(including New Jersey and Connecticut) and the Mid-Atlantic region. Depreciation increased by approximately $8 million during the quarter due to the Company's expansion. "In less than two years, we built completely new wireless networks from the ground up, faster and cheaper than our competitors," added Schmitt. "Omnipoint now covers nearly 46 million POPs. That's quite a jump from the beginning of 1998 when we marketed to just 16 million POPs. Roughly, two thirds of our covered POPs have less than one year's run rate in marketing, compared to some PCS companies which have been in operation for three years." As of December 31, 1998, the Corporation had cash of $238 million (not including an additional $53 million in a deposit account available for the convertible preferred equity). As previously announced, the Corporation also received incremental commitments from vendors for $250 million in loans that were in addition to the existing $264 million in vendor commitments that were available but undrawn. The new long-term vendor commitments include $200 million in financing from Siemens and an expansion by Nortel Networks of its financing by $50 million. Of the $514 million in financing commitments from vendors, approximately half is available for general working capital purposes. Based on current LIBOR rates, the Corporation's current total weighted average cost of drawn debt (including the recent $125 million) is approximately 9.2 percent. The incremental $250 million in vendor debt will have a weighted average interest rate of 8.45 percent. The available $264 million in prior vendor commitments has a weighted average interest rate of 8.05 percent. The Corporation's average cost of debt can be further reduced with the closing of a strategic equity deal. If a deal is not closed by April 21, 1999, the Corporation will incur an additional $625,000 in interest for each month until the deal is closed. "With regard to strategic partnering, the Corporation has now received
written proposals from multiple parties and is negotiating to come to definitive terms with each as quickly as possible. We are very fortunate that we believe we will soon be able to present our Board of Directors with very strong alternatives," said Omnipoint Corporation's CEO and Chairman Douglas G. Smith.
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Anyone have any thoughts on tomorrows direction? I say UP!
John~ |
