Cingular loses 107,000 subscribers
The nation's second-largest wireless carrier says it lost many more customers in the third quarter than expected, because of the collapse of WorldCom, a reseller of its services.
Analysts expected Cingular to lose customers, but only between 25,000 and 30,000.
The dip is fallout from the collapse of WorldCom, a telephone company that resold wireless service from both Cingular and AT&T Wireless, Bellsouth Chief Financial Officer Ron Dykes said during a conference call. Cingular is a joint venture between BellSouth and SBC Communications.
Dykes said he had expected more former WorldCom customers to sign up with Cingular after WorldCom ended its cell phone service earlier this year. But those customers either chose to go to other carriers or weren't offered Cingular service because they didn't meet Cingular's minimum credit-rating requirements, Dykes said.
The entire wireless industry is suffering from slowing cell phone sales brought on by global economic troubles. Severe price-cutting competition between carriers is also hurting potential profits, Dykes told analysts Tuesday.
"There's a fanatical level of competition in this market," Dykes said. "The cost of a minute (for carriers) is pretty close to the price of a minute (for customers). And that's become an issue."
The news from Cingular does not bode well for another of WorldCom's former partners, AT&T Wireless. That company is expected to announce its latest subscriber numbers Wednesday. Analysts are expecting a drop.
An AT&T Wireless representative could not be reached for comment Tuesday, but the company generally does not divulge information about subscribers.
If AT&T Wireless reports a subscriber dip as well, it will be the third carrier to do so in recent weeks.
Sprint PCS said earlier this month that it had lost customers because of a "higher-than-expected" decrease in the number of its Clear Pay program subscribers. Clear Pay targets low-income customers and sets a spending limit on phone calls.
Sprint PCS never said just how many subscribers it had lost. Analysts said the loss was anywhere between 8,000 and 50,000.
Although Clear Pay helped Sprint PCS gain new customers, the program was never a favorite with Wall Street analysts. They said the customers didn't spend enough money on phone calls or extra services, such as wireless Web surfing, to make the program pay off.