Leap's costs soar: Servicing costs rise 49%

Leap Wireless posted a 57 percent decline in earnings for its second quarter because of rising costs and interest expenses. Net income fell to $3.2 million, down from $7.5 million during the second quarter of 2006. However, the figure still beat most analysts' expectations. The carrier's revenue increased 47 percent to $393.2 million, up from $267.9 million during the same quarter a year ago. Leap added 126,791 net subscribers during Q2, which brings its total to 2.7 million as of the end of June. At the end of June 2006, Leap had 1.8 million subscribers. Analysts expected about 160,000 net subscribers added. Churn came in at 4.3 percent, just higher than the expected 4 percent figure analysts predicted.

One thing to watch is Leap's costs. Servicing costs increased 49 percent to $89.6 million in Q2, while equipment costs spiked 56 percent to $81.1 million.

For more on Leap's Q2:
- read this press release

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