Leap Wireless International Inc.
) declared grim financial results for the third quarter of 2013,
with both the top and the bottom line missing the Zacks Consensus
Estimate. Additionally, Leap Wireless suffered a significant net
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Reported net loss in the third quarter of 2013 was $185.4 million
or a loss per share of $2.37 compared with a net profit of $25
million or 32 cents per share in the prior-year quarter. However,
the figure was significantly wider than the Zacks Consensus
Estimate of a loss of $1.14. Quarterly cash cost per user
(primarily indicating carrier subsidy for new smartphone) was
$31.64, up 31.3% year over year.
Quarterly total revenue was $694 million, down 10.3% year over
year and slightly below the Zacks Consensus Estimate of $695
million. Service revenues came in at $646.3 million, down 10.5%
year over year. Equipment revenues were $47.7 million, down 8.3%
from the year-ago quarter.
Quarterly gross margin was 35.3% compared with 39.3% in the
prior-year quarter. Operating loss was $83.4 million against an
operating profit of $81.4 million in the prior-year quarter.
Adjusted OIBDA was $78 million, down 40.7% year over year.
Adjusted OIBDA was 12.1% of the service revenues compared with
18.2% in the year-ago quarter.
During the third quarter of 2013, Leap Wireless generated $71.7
million of cash from operations compared with $210.5 million in
the prior-year quarter. Free cash flow was a negative $25 million
compared with a negative $218.1 million in the year-ago quarter.
At the end of the third quarter, Leap Wireless had over $909.2
million of cash and marketable securities compared with $675
million at the end of 2012. Total debt was over $3,368.2 million
compared with $3,298.5 million at the end of 2012.
Debt-to-capitalization ratio was 1.00 versus 0.88 at the end of
During the reported quarter, Leap Wireless lost 196,045 net
customers against 268,984 customers in the year-ago quarter.
Total subscriber base, at the end of the third quarter of 2013
was 5,643,430 exhibiting a 17.6% year-over-year drop. ARPU was
$45.45 against $41.94 in the prior-year quarter. Quarterly cost
per gross was $319 as against $310 in the comparable earlier
-year quarter. Consolidated customer churn rate was 4% compared
with 4.8% in the prior-year quarter. Leap Wireless lost 139,636
net customers at its wireless segment against 181,573 customers
in the year-ago quarter. Quarterly wireless churn rate was 3.5%
compared with 4.2% in the year-ago quarter. Wireless subscriber
base was stood at 4,242,096 exhibiting a 12.5% year-over-year
The prepaid wireless market in the U.S. is intensely competitive
as most low-cost carriers like
America Movil SAB
) are continuously offering attractive plans like Boost Mobile,
Virgin Mobile and Tracfone. Apart from these players, telecom
) 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 #2 (Buy).