All Eyes on Sprint PCS

By Tim Kridel  |  Posted 2001-12-05 Print this article Print

Sprint PCS managed to pull off that feat in third quarter, when it added a record 1.2 million customers and handily beat Wall Street's forecast of about 871,000.

Sprint PCS managed to pull off that feat in third quarter, when it added a record 1.2 million customers and handily beat Wall Streets forecast of about 871,000. Many other major carriers missed their targets, although its worth remembering that Q3 historically is a weak sales quarter. The biggest boost usually comes in Q4, when the combination of the holiday shopping season and inclement weather prompt a lot of people to give or get a cell phone. On Dec. 4, Sprint PCS released its 2002 outlook, which calls for a total of at least 3.6 million new subs next year. The company originally said that it would add 3.8 million this year, but on Oct. 17, it revised that forecast upward to about 4.2 million — a pleasant surprise, considering that most of the industry had spent the past few months steadily revising down forecasts for handset sales and other key indicators. Its unclear whether the 2002 forecast of 3.6 million includes customers of Virgin Mobile, a virtual operator that will resell Sprint PCS service under its brand. In Europe, many carriers that sell airtime wholesale to virtual ops count the virtual ops customers as their own. That approach pumps up the wholesale carriers subscriber base and stock price.
The dark lining to this silver cloud is that 3.6 million is less than 4.2 million. Sprint PCS apparently thinks that an uncertain economy and a saturating wireless market will conspire to push growth down. Well have to wait to see how many existing customers of Sprint PCS and other carriers sign up for next-generation wireless services, which require new phones to get the full benefit. Upselling to existing customers is one way to offset declines in new subscribers.
Sprint PCS forecast has revenue growing 30% over the next year, but Tuesdays release didnt give specifics about monthly average revenue per user (ARPU), other than it will "continue to be at the $60-plus level." The size of that plus is awfully important because the company is spending about $700 million to launch its next-gen service in the first half of 2002. For that kind of scratch, it had better add more than just a few dollars to ARPU.
Tim Kridel Before joining The Net Economy in August 2000, Tim Kridel was a staff writer at Wireless Review from May 1998 to October 1999. He wrote extensively about RF and SS7 engineering and wireless data, and his cover stories include interviews with Omnipoint president George Schmitt, SBC Wireless president Stan Sigman and FCC commissioner Harold Furchtgott-Roth. In October 1999, he was named technology editor, where he assigned and edited articles for five sections, including news. His last article was a cover-story interview with NTT DoCoMo president Keiji Tachikawa. He also moderated and spoke on panels at the PCIA and Wireless I.T. shows.

From 1994 to 1997, Kridel was contributing editor of Popular Communications, where he covered AM/FM radio. He also worked as a business reporter for the Columbia Missourian and the Mid-Missouri Business Journal. He has a bachelor's degree in English from the University of Missouri and attended the University of Missouri School of Journalism, where he wrote his master's thesis on how the talk format saved AM radio. His hobbies include ham radio, which gave him an understanding of electronics and RF engineering that eventually led to a career writing about wireless technology. Tim covers the technology and business strategy behind wireless, including cellular, PCS, wireless data, wireless local loop, LMDS, MMDS and lasers.


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