XM's Quarterly Subscriber Adds Grow 17% - TheStreet

XM's Quarterly Subscriber Adds Grow 17%

Shares of the satellite-radio operator are rising 7%.
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XM Satellite Radio

(XMSR)

announced preliminary results for its second quarter early Monday, saying it anticipates a 17% jump in subscribers from a year ago.

XM said it added 322,000 new net subscribers in the quarter, bringing its total count to 9.65 million users. Gross additions from the OEM side, which includes automobile installations, reached 857,000, the fifth consecutive quarter of record adds from that side.

The retail side of the business, which has come under pressure as XM put more emphasis on the automotive segment, should see 224,000 gross additions.

Cramer: XM Grabs Listeners

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XM said that subscription revenue be in a range of $283 million to $288 million, with an adjusted operating loss between $32 million to $38 million. The company added that the second-quarter churn rate, which measures how many subscribers quit the service, should improve to 1.67%, down from 1.84% in the year-ago quarter and 1.77% sequentially. The conversation rate, a key metric among analysts, should come in at 52.7% to 53.4%.

The company said it will file second-quarter results in the next few days. On average, analysts expect XM to post a loss of 41 cents a share on total revenue, which also includes activation and merchandise sales, of $323.1 million, according to Thomson Reuters. Shares of XM were up 7% to $9.13 in early trading.

Separately, XM announced plans to offer $400 million of new senior notes as part of the refinancing for its proposed merger with rival

Sirius Satellite Radio

(SIRI) - Get Report

. XM is currently awaiting for the Federal Communications Commission to rule on the $3.1 billion deal, a process that has stretched to more than 17 months.

On Friday, XM

announced it had restructured $600 million

worth of senior notes at 9.75% due 2014. Holders will receive a combination of at least $400 million of cash -- a much larger figure than analysts had anticipated -- and up to $200 million in new senior notes issued by XM.

The yield on the new notes will not be less than 13.92% a year, although the yield will be raised to at least 15% if XM issues under $150 million in new debt. The new notes will mature in 2014, or a year earlier "in certain circumstances."

In exchange for the higher rate, the agreement requires that holders of the senior notes waive XM's change of control repurchase obligation, which would come if the merger was ultimately approved. The waiver is subject to the completion of the merger, and it's set to expire on Aug. 31.