Alltel continues strong growth in second quarter while working to close merger with TPG Capital, Goldman Sachs
LITTLE ROCK, Ark. - Alltel recorded strong growth in the second quarter by adding 181,000 post-pay customers and dropping churn to an all-time low. Alltel reported fully diluted earnings per share under Generally Accepted Accounting Principles (GAAP) of 56 cents and fully diluted earnings per share of 75 cents from current businesses, a 42 percent increase from a year ago and a record high for the quarter.
“This was truly an exceptional quarter that saw our company establish new records for earnings per share, service revenue, operating income, post-pay additions and churn,” said Alltel President and CEO Scott Ford. “The entire Alltel team has done an outstanding job of delivering strong financial results while remaining focused on our customers and working to obtain the approvals necessary to close on the merger agreement.”
Among the highlights for the second quarter:
* Revenues were $2 billion, a 12 percent increase from a year ago. Net income under GAAP was $196 million. Net income from current businesses was $261 million, a 25 percent increase from a year ago.
* Alltel added 181,000 post-pay customers, up 46 percent from a year ago. Pre-pay net additions were flat during the quarter due to seasonal trends.
* Wireless service revenue was $1.97 billion, a new record and an increase of 14 percent from a year ago.
* Post-pay churn was 1.16 percent and total churn was 1.67 percent. Both are record lows for Alltel and year-over-year improvements for the sixth consecutive quarter.
* Average revenue per wireless customer (ARPU) was $54.10, a 3 percent increase from last year. Data revenue per customer was $5.63, up 73 percent from last year and 20 percent sequentially.
* Equity free cash flow from current businesses was $243 million, a 42 percent increase. Net cash provided from operations was $552 million, a 114 percent increase from last year.
In the quarter, Alltel announced on May 20 it has agreed to be acquired by TPG Capital and Goldman Sachs Capital Partners for $71.50 per share in cash. The necessary regulatory approvals are progressing well. As expected, the Hart-Scott-Rodino waiting period expired on July 5 without issue. Proxy statements were mailed to Alltel shareholders on July 25 and the shareholder meeting to approve the transaction is scheduled for Aug. 29. The Federal Communications Commission filed a Public Notice related to the transfer of Alltel’s licenses on June 25 and, while the company is waiting to hear from the FCC more definitively on the timing of its approval process, Alltel expects a favorable FCC vote this year.
The merger agreement (which is summarized in Alltel’s proxy statement and available on the company website) provides that the obligations of TPG/Goldman Sachs to acquire Alltel are not conditioned on financing. TPG and Goldman received written commitments at the time of the deal from several of the largest financial institutions in the world to back their obligations. Alltel has been given no reason to believe that these firms will not honor their obligations. Alltel expects the transaction to close by year end.
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