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Leap Wireless International Inc. (LEAP)
Q4 2008 Earnings Call
February 26, 2009 5:00 pm ET
Amy Wakeham – Director, Investor Relations
Doug Hutcheson – President, Chief Executive Officer
Walter Berger – Chief Financial Officer
Albin Moschner – Chief Operations Officer
David Barden – Bank of America
[Simon Flannery – Morgan Stanley]
Richard Prentiss – Raymond James
Philip Cusick – Macquarie Research
Kevin Roe – Roe Equity Research
Previous Statements by LEAP
» Leap Wireless International, Inc. Q3 2008 Earnings Call Transcript
» Leap Wireless International, Inc. Q2 2008 Earnings Call Transcript
» Leap Wireless International, Inc. Q1 2008 Earnings Call Transcript
Good afternoon and welcome to Leap's fourth quarter 2008 conference call. Thanks for joining us today. This call is being recorded and will be available for telephonic playback through the close of business on March 10. Today's conference call with its accompanying presentation is also being web cast live and will be available for replay on the investor relations section of our website at investor.leapwireless.com shortly after the completion of our live call.
Joining me on the call today to discuss our fourth quarter results are Doug Hutcheson, President and Chief Executive Officer, Walter Berger, Executive Vice President and Chief Financial Officer and Al Moschner, our Chief Operating Officer. Following our prepared, Emile will come back on the line with instructions for the question and answer portion of the call.
The results and data we discuss today include information reflecting the consolidated results of Leap, its subsidiaries, its joint venture partners for the periods indicated. Also as used in today's conference and accompanying presentation the terms existing markets refers to the company's markets in operation as of December 31, 2007 and expansion markets refers to the company's new markets in which we have launched service after December 2007.
In addition, the term existing business refers to the company's business operations in effect on December 31, 2007 excluding any effects of the company's new market launch activity or its Cricket broadband and Cricket pay go service offerings.
During our call we'll discuss some non-GAAP financial measures. For a GAAP reconciliation of our non-GAAP financial measures, please refer to the notes to the financial statements that were contained in today's earnings release and also to the financial reports page of the investor relations section of our website at investor.leapwireless.com.
Statements made today that are not historical in nature including statements about future events and performance such as our plans to offer our services to additional covered pops, and expectations regarding future growth, spending, results of operations and customer penetration are forward-looking statements. Our actual results could differ materially from those stated or implied by these forward-looking statements.
Factors that could cause actual results to differ from our forward-looking statements are detailed in the section entitled risk factors included in our annual report on Form 10-K for the year ended December 31, 2008 which we plan to file shortly. For anyone listening to a taped or a web cast replay or reviewing a written transcript of our fourth quarter call, please note that all information presented is current only as of today's date, February 26, 2009. The company disclaims any duty or obligation to update any forward-looking information whether as a result of new information, future events or otherwise.
With that, I would now like to turn the call over to Doug.
Thank all of you for joining us this afternoon. As we review our results and outlook today, it's clear that the resilience of our business and the success of our core strategic focus continues to enable us to deliver strong customer and financial results even in this challenging economic and competitive environment.
Further, as we've now moved well into the implementation of our new initiatives we have increased visibility into how we expect the business to perform in the coming months and quarters which we're pleased to share with you today.
Turning to full year results, 2008 was a year of building a strong foundation for what we expect will be several years of significant customer and financial growth in 2009 and beyond. Even as we were active in building for the future, 2008 was a good year, perhaps a great year given the overall environment.
Our customer base increased nearly 50% year over year to 942,000 net customer additions. Turn dropped year over year as we anticipated the early effects from the launch of Auction 58 markets would subside and the business would return to more traditional levels of churn.
Service revenues improved as well as total revenues by over 20%. Our adjusted or total business increased 5%, but with nearly $173 million related to our future new initiatives removed, the business increased to the existing business by 50%.
Our strategy is working. When 2008 results are put in perspective, both to where we had been in the previous three years and where we expect to head in 2009 and beyond it is clear. Our covered pops in the last three years increased from 27 million to 67 covered pops, an increase of nearly 143%. What came along with that was 131% increase in customers.
During the course of 2008, we completed the roll out of our broadband initiative across all 67 million pops and the expected Auction 66 launches of 11 million covered pops were completed during the quarter and we look forward to another 25 million this year, bringing our total to over 90 million covered pops.
Turning to adjusted OIBDA for the year, OIBDA grew 50% even while absorbing 172 million of investments in the growth initiatives. The existing business OIBDA increased by 112% during that same period and we believe the investments that we've made for our future growth initiatives will generate significant future cash flows.