Leap Wireless 4Q Loss Widens On Losses For New Markets

   DOW JONES NEWSWIRES 
 

Leap Wireless International Inc. (LEAP) reported a wider fourth-quarter loss on losses related to new market launches, though the prepaid wireless services company nearly tripled its net customer additions and customer cancellations declined.

Prepaid, or pay-as-you-go, phones used to be the province of consumers whose weak credit didn't qualify them for traditional monthly cellphone plans. But lately, a growing number of people looking to trim household budgets appear to be discovering them.

"The resiliency of our business and the success of our core strategic focus continue to enable us to deliver strong customer and financial results in this challenging economic environment," Chief Executive Doug Hutcheson said in a statement Thursday.

Chief Financial Officer Walter Berger said the company expects capital and net operating expenses will decrease "through the upcoming year, resulting in the business being at or near free cash flow breakeven by the end of 2009." Berger added that the company believes the nearly $600 million in cash, cash equivalents and short-term investments it had available at year end, in addition to ongoing cash flow, will provide it sufficient liquidity.

Shares rose 2.3% in late trading to $25.45.

Leap, which targets lower-income customers in smaller markets, posted a net loss of $54.8 million, or 81 cents a share, compared with a prior-year net loss of $18.1 million, or 27 cents a share. The latest results include 86 cents in losses related to the company's launch of new markets and "other initiatives."

Revenue rose 21% to $518.9 million.

Analysts polled by Thomson Reuters were expecting an 83-cent loss on $542.9 million in revenue.

Average revenue per user dropped 6.9%.

In January, Leap said its net customer additions for the fourth quarter nearly tripled to 385,000, putting the year-end total at 3.84 million, up 34% from a year earlier. Its churn rate - reflecting customer cancellation - improved to 3.8%, down from 4.2% in the prior year.

The company said Thursday it expects its net customer additions this year will exceed 1.5 million.

Leap competes in the prepaid wireless market with MetroPCS Communications Inc. (PCS), which earlier Thursday reported it swung to a fourth-quarter profit amid expanded availability of its contract-less, unlimited calling plans.

But the competition is increasing, as T-Mobile's Boost Mobile recently shook up the industry by offering a flat-rate $50 plan, which includes unlimited calling, text messages, Web surfing and walkie-talkie service. Leap Wireless and MetroPCS offer similar unlimited plans but with regional restrictions.

-By Donna Kardos, Dow Jones Newswires; 201-938-5963; [e-mail]