Showing little adverse impact from recession in most recent tax filings, big communications associations generally enjoyed sound surpluses -- and at least 3 paid their top executives $1 million or more -- according to their latest tax returns. New leader in communications groups salary sweepstakes was CTIA Pres. Tom Wheeler, at just under $1.3 million total compensation, supplanting last year’s leader, USTA’s Roy Neel, who left partway through 2000 tax year. MPAA Pres. Jack Valenti was close 2nd at $1.16 million, followed by NCTA Pres. Robert Sachs at $1.09 million and NAB Pres. Edward Fritts at $908,552.
Sprint PCS said it expected full year revenue to grow 50% in 2001 to $9.7-$9.8 billion and to $13 billion in 2002, which would be 30% increase. Carrier reiterated forecast for 4th quarter, saying it expected revenue to rise 40% to $2.7- $2.8 billion. Sprint PCS projected average revenue per customer would be $60 or more next year. Earlier this year, Sprint PCS had revised its forecast for subscriber additions to 4.2 million in 2001, up from earlier 3.8 million, and forecast adding 3.6-3.7 million in 2002. Sprint said it expected 4th-quarter wireless customer turnover (churn) would reach 3% and for 2002 in upper 2% range, although over long term rate would be in mid-2% range. Sprint expects $600 million operating loss this year, but projects turnaround in 2002 to “substantial positive operating income.” Company said “year-over-year improvement is expected to exceed $1 billion.” Cash requirements for 2002 are forecast to hit $1.8 billion, company said, which it planned to meet by issuing additional debt and selling assets. “We have aggressive, but we believe attainable, growth and profitability objectives in 2002,” Sprint Chmn. William Esrey said. Sprint PCS now has 2 million wireless data users, he said. “We expect this growth will accelerate as we move to higher data speeds with the introduction of 3rd generation wireless technology in 2002.” Esrey said Sprint’s FON group saw slight decline this year in access lines in local telephone territories, lower-than-anticipated data growth, lower telecom equipment revenue. “The impact of the economy on FON Group performance this year is unquestionable.” Even so, there’s still “room to grow” in wireless, IP and data, he said. He said Sprint expected one-time write-down in 4th quarter as result of terminating ION services to business and consumer customers. Fourth quarter revenues are expected to be $4.1-$4.2 billion, 5%-6% below 4th quarter 2000. He predicted 2002 revenue in range of $16.8-$17.2 billion, compared with estimated 2001 revenue of $17-$17.1 billion.
FCC allowed Motient and TMI to transfer space and earth station licenses to Mobile Satellite Ventures (MSV) joint venture. Commission said authorizations would allow Motient and TMI to develop Canadian-American regional mobile satellite service. Motient will own 48.1% and TMI 39.9% of new company. Other owners are Columbia Capital (3.8%), Spectrum Equity Investors (3.8%), Telecom Ventures (4.3%). Non-U.S. entities hold ownership interests in Motient, TMI, Columbia Capital and Spectrum Equity Interests. Request to launch and operate next-generation satellite system, along with waiver to deploy terrestrial base stations, will be considered in another proceeding. Petitions by Dept. of Justice (DoJ) and FBI were granted to condition authority based on compliance of agreement with DoJ and FBI on law enforcement, national security and public safety issues. Commission also held that public interest wouldn’t be served by prohibiting proposed indirect foreign ownership of MSV in excess of 25%. Foreign ownership may be as high as 45%, applicants said. FCC also dismissed as moot petition to deny filed by Deere & Co. Satellite systems of TMI and Motient are linked and jointly secured. Motient offers land, maritime and aeronautical mobile satellite services (MSS) in upper L-band in contiguous U.S., Alaska, Hawaii, Virgin Islands. Motient received license in 1989 and launched first satellite in 1995, beginning service following year. TMI is subsidiary of BCE of Canada. It operates L-Band MSS system via MSAT-1 satellite. In last 2 years, Commission has granted TMI blanket earth station licenses to provide MSS to mobile terminals located in U.S.
SBC made Sept. payment of $2.4 million to U.S. Treasury -- down from $3.8 million last month -- for not meeting all performance measures required under its merger with Ameritech. Verizon paid $1.5 million on Tues. (CD Sept 27 p4). SBC said payments had continued to decline and now were half of what company paid in Jan., reflecting improvements in wholesale service to competitors. Company said it had to meet 360 performance measurements disaggregated into some 20,000 submeasurements. Each month it provides results of those measurements to every CLEC in every state in its territory, company said, making it responsible for tracking nearly 3 million submeasures. Some measures are so specific that if SBC misses deadline by few hours it has to pay fee, company said.
Verizon paid $1.52 million to U.S. Treasury Fri. for not fully meeting wholesale provisioning conditions established in FCC’s approval of Bell Atlantic-GTE merger last year. This was first payment made by Verizon -- and first time it was eligible for possible payment. Payment cycle for Verizon clicked in when company failed to meet conditions for 3 months in row, starting in April, and Fri.’s payment was for first such time period -- April, May and June. Verizon official said it was almost impossible to have 100% compliance because there were so many metrics that are measured on company’s providing of service to competitors. Spokesman said payment actually indicated high level of service because it was much lower than maximum payment of $21 million. He said 3 problem areas triggered payment: (1) Percent of time Verizon provided special access unbundled network elements (UNEs) within given time. (2) Percent of repeat trouble reports on any given line in 30-day period. (3) Average days of delay associated with providing UNEs and resale. Meanwhile, SBC paid $3.8 million under conditions of its merger with Ameritech but issued statement saying that was half of what it had to pay in Jan. SBC said its service had been improving but metrics were so specific that “no company could be measured in such minute detail without turning up areas that fall short of perfection.” SBC said it had 360 performance measurements “that are disaggregated into over 20,000 submeasurements.” All of those measurements have to be provided for every CLEC it does business with in every state, SBC said.
Wall St. analysts are openly questioning why Viacom COO Mel Karmazin recently sold 700,000 shares in company, for about $35 million. Sale was disclosed in company’s latest SEC filing. Karmazin has argued that Viacom’s shares, which closed Mon. at $50.24, actually are worth about $100 (CD April 5 p5). After Viacom acquired CBS (along with Karmazin) 15 months ago, he signed 3-year contract that prevented him from selling any shares for year. After sale, which represented about 7% of his holdings in company, according to analyst, he still controls 3.8 million shares. He also has vested stock options in 5 million shares.
New Skies said Thurs. it had doubled net income in 2nd quarter. It said revenues for 2nd quarter were $53.2 million, up from $45.1 million in same 2000 period, and net income increased to $8.1 million from $3.8 million. New Skies Satellites said arbitration panel ruled in its favor in dispute with Astrium over construction contract for KTV satellite that New Skies said wasn’t delivered on time in 1999. Decision by New Skies to terminate contract with cause was proper, 3-member arbitration panel ruled. New Skies now is entitled to return of $53.25 million.
Sprint said revenue in its wireline FON group dipped 3% in 2nd quarter to $4.31 billion, with net income falling 35% in year to $290 million but meeting lowered company forecasts. It said net income figure excluded costs of failed WorldCom merger and nonrecurring gain on sale of independent directory publishing unit. Despite overall decline, local telecom revenue was up 3% in quarter to $1.55 billion and voice-grade equivalent lines rose 17% in year. In global market segment, revenue dipped 5% as result of sagging long distance voice revenue and reduced sales of network management services and customer-premises equipment. Business voice revenue continued to “be impacted by aggressive market pricing,” Sprint said. However, sales of data services, particularly of asynchronous transfer mode, continued to grow. Data revenue rose 6% in quarter and dedicated IP service revenue 30%. Not surprisingly, Sprint PCS, its wireless tracking stock, showed strong growth, with revenue up 53% in quarter to $2.26 billion. Sprint PCS added more than 1 million customers in quarter, with total customer base, including resale and affiliate customers, reaching 12.8 million, up 60% in year. Sprint PCS said business customer base surged 62%, driven in part by its wireless Internet service for business content and applications. In quarter, carrier made $1.06 billion in capital expenditures. Sprint PCS reiterated that its wireless net customer additions for year could hit 3.8 million. That would create operating profit of $1.7 billion for year, $100 million above forecast. On wireline side, Sprint said it expected FON Group revenue to decline 1-2% in 3rd quarter from year ago. PCS capital spending for year will total $3.4 billion and wireline spending $5.9 billion. Sprint PCS CFO Charles Levine said in conference call that carrier wasn’t affected by recent U.S. Appeals Court, D.C., ruling returning C- block licenses to NextWave. That decision upsets results of C- block auction earlier this year. Levine said: “We only bid on licenses in Tampa, Orlando, Cincinnati, Dayton and Norfolk and we will not be capacity constrained.” He acknowledged ruling “creates a level of uncertainty in the industry” but said ubiquity of Sprint’s wireless network safeguarded company from impact. Sprint Exec. Vp-CFO Arthur Krause said Sprint PCS would invest $700-$800 million to complete nationwide upgrade to CDMA 1xRTT flavor of 3G. That’s expected to be completed by mid-2002, with half of planned spending this year and half next year.
Moody’s cut Lucent debt rating to “junk” status Tues. with warning it may cut rating again over concerns of company’s ability to raise cash. Agency cut senior long-term debt to “Ba1,” its highest junk grade, from “Baa3” and Lucent commercial paper, or short-term debt, from “Not Prime” from “Prime-3.” Cuts affect $3.8 billion of Lucent debt. Company faces “more protracted downturn” and may not be able to sell its fiber cable division fast enough and for enough money, Moody’s said. Lucent also faces Sept. 30 deadline to raise $2 billion to finish spinoff of Agere Systems optical components unit. Standard & Poor’s cut equivalent ratings for Lucent to junk June 12.
ATLANTA -- Growth of residential DSL could be twice that of cable modems, but operational problems are likely to slow rollout, Gartner Dataquest survey found. Survey is good news for DSL and shows “high-speed Internet access in the U.S. is in the mainstream and quickly replacing dial-up,” Dataquest Vp-Chief Analyst Kathie Hackler said at Supercomm 2001 here. In U.S., high-speed Internet access (cable and DSL) grew 67% in 2000, compared with 7% gain in dial-up connections. One-quarter of U.S. households could have high-speed Internet by end of 2001 and broadband access will account for 45% of consumer Internet access by 2005, Hackler said.