Leap Wireless International Inc.
) declared grim financial results for the second quarter of 2013,
with both the top and bottom lines missing the Zacks Consensus
Estimate. Additionally, Leap Wireless suffered a significant net
subscriber loss. Consolidated customer churn rate was 4.3%
compared with 4.4% in the prior-year quarter.
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Reported net loss in the second quarter of 2013 was $163.1
million or a loss per share of $2.09 compared with a net loss of
$41.6 million or a loss of 54 cents per share in the prior-year
quarter. However, adjusted net loss per share of $1.15 was
significantly higher than the Zacks Consensus Estimate of a loss
of 94 cents. Quarterly cash cost per user (primarily indicating
carrier subsidy for new smartphone) was $27.79, up 21.3% year
Quarterly total revenue was $731.5 million, down 7% year over
year and also below the Zacks Consensus Estimate of $736 million.
Service revenues were $678.5 million, down 9.7% year over year.
Equipment revenues were $53 million, up 49.3% year over year.
Quarterly gross margin was 40.8% compared with 45.6% in the
prior-year quarter. Operating loss was $9.5 million compared with
an operating profit of $31.9 million in the prior-year quarter.
Adjusted OIBDA was $148.8 million, down 22% year over year.
Adjusted OIBDA was 22% of the service revenue compared with 25%
in the year-ago quarter.
During the second quarter of 2013, Leap Wireless generated $10.6
million of cash from operations compared with $15.2 million in
the prior-year quarter. Free cash flow was negative $38.3 million
compared with negative $250.2 million in the year-ago quarter. At
the end of the second quarter, Leap Wireless had over $913.1
million of cash and marketable securities compared with $675
million at the end of 2012. Total debt, at the end of the
reported quarter, was over $3,620 million compared with $3,298.5
million at the end of 2012. Debt-to-capitalization ratio was 0.96
compared with 0.88 at the end of 2012.
During the reported quarter, Leap Wireless lost 364,268 net
customers against 289,270 customers in the year-ago quarter.
Total subscriber base, at the end of the second quarter of 2013
was 5,031,930 exhibiting a 16% year-over-year drop. ARPU was
$44.89 up 7.8% year over year. Quarterly cost per gross addition
increased 30.7% year over year to $387. Leap Wireless lost
255,132 net customers for its wireless segment against 142,779
customers in the year-ago quarter. Quarterly wireless churn rate
was 3.6% compared with 3.3% in the year-ago quarter. Wireless
subscriber base was 4,381,735 exhibiting a 12.9% year-over-year
The prepaid wireless market in the U.S. is intensely competitive
as most low cost carriers like Boost Mobile and Virgin Mobile
) and Tracfone of
America Movil SAB
) are continuously offering attractive plans for its subscribers.
Apart from these low cost players, telecom giants like
) and Verizon Wireless are targeting the prepaid market segment,
which we believe may further intensify competition going forward.
Leap Wireless currently has a Zacks Rank #3 (Hold).