Price Wars Take Toll On AT&T Wireless - InformationWeek

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Price Wars Take Toll On AT&T Wireless

Net income fell 73% in the second quarter as per-customer revenue fell and costs rose.

NEW YORK (AP) -- AT&T Wireless Services Inc.'s earnings declined 73 percent in the second quarter from a year ago as industry price wars drove down the average revenue from each customer while the company's expenses increased.

The Redmond, Wash.-based wireless telephone giant reported Wednesday it earned $61 million, or 2 cents a share, in the April-June period, down from $228 million, or 8 cents a share, a year ago. Analysts surveyed by Thomson First Call had expected the company to lose 1 cent a share.

Revenue edged up to $4.22 billion for the quarter from $4.16 billion for the same period last year.

But average revenue per user declined to $58.80, down from $60.60 a year ago. Expenses increased, with the company's cost of equipment sales rising as customer rebates for phones become more generous. Capital expenses also rose from $373 million a year ago to $897 million in the latest quarter.

The customer churn rate, or the percent of customers who leave for competitors, also increased, from 2.2 percent in the year ago quarter to 3.4 percent this quarter.

The company earned $3 million, about break-even in per-share terms, in the six months ended June 30, compared with earnings of $370 million, or 13 cents a share, a year ago. Its revenues rose to $8.29 billion from $8.11 billion a year ago.

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