Cingular Stumbles on Sub Growth

Cingular's subscriber growth stumbled in the second quarter as the company narrowly topped the 1 million net new user mark.

The Atlanta-based wireless venture of SBC (SBC) and BellSouth (BLS) added 1.07 million net new subscribers in the quarter ended June 30. That compares with 1.4 million net new users added in the prior quarter and the 1.25 million that analysts were expecting.

Cingular posted sales of $8.6 billion in the quarter, slightly below the consensus expectation of $8.7 billion. The company says its average revenue per user, or ARPU, in the quarter was $50.43. That's up from $49.59 in the prior quarter, but down 5.6% from the year-ago period.

The company blamed cheaper calling plans such as its family package and its rollover offer.

Loyalty remained unchanged during the quarter. Cingular says its monthly customer defection rate or churn was 2.2%, the same as in the prior quarter. But churn numbers can be somewhat suspect, as subscriber accounting methods vary in terms of accuracy due to double counting and delays in account terminations.

Last month, wireless industry observers had predicted that No. 2 Verizon Wireless, jointly owned by Verizon (VZ) and Vodafone (VOD), was gaining at Cingular's expense. Verizon reports its second-quarter results Tuesday.

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