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Thread: Cingular Wireless Reports Record Third-Quarter 2006 Results

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    Cingular Wireless Reports Record Third-Quarter 2006 Results

    Cingular Wireless Reports Record Third-Quarter 2006 Results

    - Highest-ever net income of $847 million, a year-over-year increase of over 280 percent

    ATLANTA, Oct. 19 /PRNewswire/ -- Cingular Wireless LLC, which is a joint venture of AT&T Inc. (NYSE: T) and BellSouth Corporation (NYSE: BLS), today reported record-setting net income of $847 million for the third quarter, which is a year-over-year increase of over 280 percent.

    The company also achieved a year-over-year increase in ARPU, normalized OIBDA margins that were the best since 2001, and the completion of its GSM network integration.

    "Cingular turned in a great third quarter on a variety of fronts. Solid execution drove a significant increase in net income, growth in ARPU, and strong margin performance," said Stan Sigman, Cingular's president and chief executive officer.

    "Cingular's strong financial and operational performance positions us well as wireless capabilities and our customers' demand for new wireless voice, data, and video services continue to increase," Sigman said. "Our work is not yet done in bringing even better results, services, and capabilities to our customers."

    Cingular's normalized OIBDA margin* was 35.6 percent in the third quarter, which is an improvement of 400 basis points compared to normalized year-ago results and a sequential improvement of 300 basis points.

    For the quarter, the nation's largest wireless provider reported postpaid churn of 1.5 percent, equal to the company's best-ever results. This is a year-over-year improvement of 50 basis points and flat compared to the second quarter of 2006.

    Overall monthly subscriber churn was 1.8 percent, which represents a year- over-year improvement of 50 basis points and a sequential increase of 10 basis points. The sequential increase resulted from normal seasonality patterns, the sunsetting of AT&T Wireless' prepaid plans, and from certain actions the company took to recover increased costs associated with serving the rapidly diminishing base of its TDMA customers.

    Cingular's net additions were driven by lower churn and strong gross customer additions. The company reported 1.4 million net adds. Cingular's performance in net adds compares to 867,000 in the year-ago quarter and to 1.5 million in the second quarter of 2006. Some 928,000 of the 1.4 million net adds were postpaid customers, marking the company's third consecutive quarter of postpaid net adds nearly at or above the 900,000 level.

    In addition, retail customers represented 87 percent of net adds in the third quarter, which compares to 74 percent in the year-ago quarter and to 75 percent in the second quarter of 2006. Reseller customer net additions were 174,000, which is down from 228,000 in the year-ago quarter and from 380,000 in the second quarter of 2006.

    Gross additions were 4.6 million, which compares to 4.4 million in the year-ago third quarter and to 4.4 million in the second quarter of 2006.

    Cingular ended the third quarter of 2006 with 58.7 million cellular/PCS subscribers, tops among U.S. carriers and a year-over-year increase of 6.4 million. Data ARPU was $6.32, up 46 percent over the year-ago third quarter and up 10 percent sequentially.

    In addition, the company's Business Markets Group signed more than 1,000 new and renewed high-end service contracts in the quarter.

    During the third quarter of 2006, 99 percent of minutes were carried on Cingular's GSM/UMTS/HSDPA network and 94 percent of the company's subscriber base was GSM/UMTS/HSDPA-equipped.

    Cingular operates the nation's largest digital voice and data network. GSM is the world's most widely used wireless technology. Through roaming alliances with other GSM-based providers around the world, Cingular provides the largest global presence of any U.S. wireless carrier, with voice coverage in nearly 190 countries and data roaming in 115.

    Financial Results

    - In the third quarter of 2006, Cingular's total revenues were $9.6
    billion, up 9.2 percent over revenues for the year-ago quarter and 3.6
    percent compared to the second quarter of 2006. Service revenues,
    which exclude revenues from sales of handsets and accessories, were
    $8.7 billion, which is a year-over-year increase of 12.2 percent and a
    sequential improvement of 4.4 percent.

    - ARPU increased to $49.76. This compares to $49.65 in the year-ago
    quarter and to $48.84 in the second quarter of 2006. Continued growth
    in data ARPU contributed to this increase in overall ARPU.

    - ARPU from data services continued to grow robustly, increasing by 46
    percent to $6.32 year-over-year and 10 percent sequentially. This
    growth was spurred by the increasing popularity of downloadable games,
    ringtones, mobile instant messaging, mobile email, photo messaging, and
    media bundles. In addition, text messaging continued to grow. In the
    third quarter of 2006, Cingular had 28 million active data customers,
    and delivered 138 million multi-media messages and 10 billion text
    messages.

    - Reported operating expenses were $8.1 billion, which included $87
    million in OIBDA-affecting merger integration costs and $52 million
    non-cash merger integration costs, for a total of $139 million.
    Operating expenses also included $314 million in non-cash amortization
    of intangibles as part of the merger with AT&T Wireless.

    - Reported OIBDA margin was 34.5 percent. Normalized OIBDA margin of
    35.6 percent was the highest margin the company has posted since 2001.
    This is an improvement of 400 basis points compared to the year-ago
    quarter and 300 basis points compared to the second quarter of 2006.

    - Reported operating income was $1.4 billion, which compares to $657
    million in the year-ago quarter and to $1.0 billion in the second
    quarter of 2006. Normalized operating income was $1.9 billion, which
    compares to $1.4 billion in the year-ago quarter and to $1.5 billion in
    the second quarter of 2006.

    - Reported net income was $847 million, which compares to $222 million in
    the year-ago quarter and to $540 million in the second quarter of 2006.
    Normalized net income was $1.2 billion, which compares to $835 million
    in the year-ago quarter and to $956 million in the second quarter of
    2006.

    - Capital expenditures were $1.8 billion. These were driven by, among
    other developments: continued progress in merger integration; ongoing,
    rapidly accelerating improvements in network coverage and quality; and
    the continued introduction of Cingular's powerful UMTS/HSDPA 3G
    technology in markets around the country.

    Third-quarter highlights and initiatives

    - Cingular completed its GSM network integration, which began shortly
    after the company's merger with AT&T Wireless in October of 2004. With
    access to 45,000 cell sites around the country, customers are
    experiencing dramatically improved coverage and call quality, including
    the fewest dropped calls.

    - The company continues its aggressive deployment of 3G UMTS/HSDPA
    network throughout the country. The 3G service, which offers mobile
    wireless broadband connections averaging 400-700 kilobits per second,
    is available in 115 cities (with populations of 100 thousand or more)
    in and around 52 major markets in 28 states and the District of
    Columbia. Customers can use the 3G connections to access e-mail and
    information services or watch streaming video clips using Cingular
    Video.

    - Cingular launched the LG CU500, a feature-packed device based on HSDPA
    technology, allowing customers to realize the full potential and
    benefits of Cingular's high-speed 3G network. The CU500 easily
    addresses customers' voice, data, messaging and music needs.

    - In its continuing effort to raise the bar in mobile music, Cingular
    introduced its third phone with iTunes -- the MOTORAZR v3i. The
    MOTORAZR v3i is the latest addition to the award-winning RAZR family of
    products, offering Cingular customers the ultimate in design and
    entertainment. To date, Cingular remains the first and only U.S.
    carrier to offer phones with iTunes.

    - Cingular continued to introduce innovative new products and services
    for business customers. Three new 3G-capable business devices were
    launched during the quarter: the Lenovo ThinkPad T60 and Panasonic�
    Toughbook� CF-29 notebooks, both of which have Cingular's UMTS/HSDPA-
    based BroadbandConnect service built-in; and the Sierra Wireless
    AirCard� 875 LaptopConnect Card, the first commercially available
    HSDPA 3.6 Mbps network card in the Americas.

    - The company also introduced the two powerful new handheld devices
    priced at under $150: the Nokia E62, designed specifically for e-mail,
    and the Cingular 3125 Smartphone, which blends powerful business and
    entertainment capabilities in a flip-phone design. Cingular also
    strengthened its leadership position in wireless e-mail with the
    introduction of BlackBerry� Connect" on the Palm� Treo" 650
    and Good" Mobile Messaging for IBM Lotus� Notes�.

    - Cingular also signed more than 1,000 new and renewed high-end service
    contracts during the third quarter of 2006. These included business
    and government accounts such as Assurant, Banta Corporation, Brooke
    Corporation, BusRadio, Commonwealth of Kentucky, J.R. Simplot Company,
    Nokia, St. Paul Travelers, Southwest Airlines, Southwest Freight Lines,
    STERIS Corporation, Unilever, the U.S. Army/U.S. Air Force, U.S. Marine
    Corps Recruiting Command, VHA Inc., Valspar Corporation, Weyerhaeuser,
    and XOJET.

    Conference Call with Investment Community

    Cingular will hold a conference call with the investment community beginning at 10 a.m. ET today. During the call, we will discuss our operational and financial results and prospects.

    The conference call will be Webcast and archived on Cingular's Website at http://www.cingular.com/investor for 30 days, as well as on the websites of AT&T Inc. and BellSouth Corporation.

    Cingular's third quarter 2006 news release and downloadable financial statements will be available on the http://www.cingular.com/ website beginning at 8:00 a.m. (Eastern) on October 19.
    Today a group of leading venture capitalists published an open letter to the FCC calling on them to prevent what they say would be the end of net neutrality and a crippling blow to young startups.
    No Google, say it ain't (or wouldn't of been ) so! ATT and Verizon would have killed their own cash cow.

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    Thumbs up for solid growth! It'll be nice if we can crest past 60M subscribers by year's end.

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    Cingular added me to the list of subscribers on Oct. 11th. With the continuation of growth in their 3G services, and network expansion it should be another great year in the growing number of customers for Cingular.
    Last edited by Cellgirl#1; 10-19-2006 at 09:42 AM.

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    Listening to the Q3 webcast right now... they acknowledged a "rebranding" question from a guy at Bank of America, but were not ready to talk about any details on that yet- don't expect any other details on that until next year it sounds like. They're standing behind their last name swap and aren't ready for another one yet.

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    Damn .. those are some really good #s .. both ARPU and subs ... could have been more if they have released the 8525 in time ..
    MoJo - Mobile JoKer

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    yeah I was on the call...and the numbers are simply phenomenal...but to be frank as a current Cingular customer I think the network is inferior to that of Verizon. The only reason I haven't left is that as a former ATT Wireless customer I have a fantastic plan and I'm anxiously awaiting the release of the 8525. These are the only reasons I stay with Cingular...I continue to get dropped calls and other strange network problems...I"m not at all convinced by their recent marketing of late (least dropped calls of any other carrier...blah blah blah). And I resent de la Vegas' and the other guy's over optimism about the quality of their network and the happiness of their customers....because from what I hear all over the boards a lot of people are unhappy with Cingular.

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    Quote Originally Posted by kenny6774
    yeah I was on the call...and the numbers are simply phenomenal...but to be frank as a current Cingular customer I think the network is inferior to that of Verizon. The only reason I haven't left is that as a former ATT Wireless customer I have a fantastic plan and I'm anxiously awaiting the release of the 8525. These are the only reasons I stay with Cingular...I continue to get dropped calls and other strange network problems...I"m not at all convinced by their recent marketing of late (least dropped calls of any other carrier...blah blah blah). And I resent de la Vegas' and the other guy's over optimism about the quality of their network and the happiness of their customers....because from what I hear all over the boards a lot of people are unhappy with Cingular.
    I just left Verizon for the same problems that you are reporting with your cingular service. Your service is only as good as the network towers that are in your area. I will never again make the mistake of staying with a carrier just because of a phone.

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    It looks like getting rid of all those excessive roamers and LTV-1's paid off.

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    Was the 280% increase in net income in Q3 over last year soley the result of the addition of AT&T Wireless revenue or subsequent increase in sales?

    Thanks!

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    i just keep waiting for the other shoe to drop.... i just don't see how cingular is able to maintain these numbers... But the shoe hasn't dropped yet, and may never....

    Jeff
    HoFo Feedback



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    Quote Originally Posted by jeffro01
    i just keep waiting for the other shoe to drop.... i just don't see how cingular is able to maintain these numbersJeff
    People keep saying this right before each quarter, but yet Cingular continues to surprize us.
    Hartford, CT Area

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    Quote Originally Posted by Sonix
    ...
    In addition, retail customers represented 87 percent of net adds in the third quarter, which compares to 74 percent in the year-ago quarter and to 75 percent in the second quarter of 2006. Reseller customer net additions were 174,000, which is down from 228,000 in the year-ago quarter and from 380,000 in the second quarter of 2006.
    ...
    It looks like the Tracfone effect is wearing off. Either the Tracfone adds have declined, or the churn is starting to kick in - as would be expected after a few big quarters of adds.

    Luckily for Cingular, they seem to be doing well with Cingular-branded customer adds.

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    Quote Originally Posted by hi-def
    Was the 280% increase in net income in Q3 over last year soley the result of the addition of AT&T Wireless revenue or subsequent increase in sales?

    Thanks!
    No. Last year was 2005. AT&T Wireless was added in 2004.
    I DON'T HAVE A SIGNATURE....SORRY

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    these guys are all smiles
    vvvvvvvvvvvvvvvvvvvv
    Originally posted by Aaron662c
    RF doesnt matter when you have such a cool phone WHO NEEDS An RF SIGNAL ANYWAY!!!!
    Quote Originally Posted by usual
    I have no wrong info that I am aware of.

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    Quote Originally Posted by DRC72
    People keep saying this right before each quarter, but yet Cingular continues to surprize us.
    I know... lol... i can't figure it out... if i still lived in KC i would maybe possibly give cingular 3G a try...

    Jeff

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