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Alltel reports $124.9 million quarterly loss on buyout charges Friday, May 16, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - Privately held Alltel Corp. on Thursday reported a $124.9 million first-quarter net loss, attributed largely to accelerated increases in interest costs and depreciation and amortization expenses following its go-private transaction. In last year's first quarter, Alltel posted $230.1 million in net income on revenues of $2.1 billion. Depreciation and amortization expenses rose by $177 million year-over-year, while interest expense skyrocketed to $496.5 million from $46.7 million a year ago due to changes in the company's leverage, Alltel said. Alltel started the year off well, CEO Scott Ford said, highlighting an 11 percent increase in revenues, which came in at $2.3 billion. Average revenue per customer rose 2 percent to $53.64. Analysts were impressed with some of the company's other quarterly numbers. "First-quarter gross customer additions almost look like a fourth quarter they were so strong, and that sort of flowed down into the net additions," Thomas Lee, a financial analyst with JP Morgan, said in a conference call. Alltel added 1 million gross wireless customers for the quarter, a 26 percent increase. Net customer additions rose 63 percent to nearly 385,000. Analysts also were impressed with the company's liquidity. Alltel reported a current ratio of 1.49 for the quarter, up from 1.32 in the fourth quarter of last year. With that increased liquidity, the company will consider an optional prepayment on its debt or reinvesting in the business, among other things, chief financial officer Sharilyn Gasaway said in the conference call. At the time of Alltel's $24.7 billion go-private transaction in November 2007, speculation swirled that Alltel was going to harness the deep pockets of its new owners to participate in the Federal Communication Commission's auction of wireless spectrum. The 700 MHz spectrum is expected to require less equipment and dramatically improve reliability and performance, industry experts say. Although Alltel participated briefly in the auction, which began Jan. 24, it didn't come away with any of the spectrum. Verizon Communications Inc. and AT&T Inc. dominated the auction. "We went really to lawyer about to see if it were going to go cheap, because that would have been a great place for us to pick up some spectrum that fit at a reasonable price," Ford said. "What was clear within the first week was that that wasn't going to be the case." Ford said the company is comfortable with its current spectrum position but is always looking to supplement it. Alltel has also performed well during the national economic downturn and the credit crisis, because customers, particularly families, have been more apt to get rid of their landline phones and replace them with wireless phones for each individual to save money, Ford said. "I actually think that the credit impact that we are seeing go through the economy may have, in some oxymoronic way, have been a benefit to the wireless business," he said. |
