América Móvil's U.S. TracFone unit added close to 236,000 net subscribers in the second quarter, significantly lower than the first quarter and the year-ago period. The company blamed the slowdown in subscriber adds on higher churn.
TracFone ended the quarter with 18.75 million total subscribers, up 17.9 percent from the year-ago period and up from around 18.5 million subscribers at the end of the first quarter. However, TracFone, which sells the flat-rate, prepaid Straight Talk service and operates as an MVNO using Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T), and T-Mobile USA's networks, posted weaker net additions than the 780,000 it had in the first quarter and the 460,000 net adds it had in the second quarter of 2010.
In a conference call July 21 with investors, América Móvil CFO Carlos Garcia Moreno blamed seasonality for the slowdown but also acknowledged that increased churn was a factor. Churn in the quarter jumped to 4.3 percent from 4 percent in the year-ago period.
TracFone's revenue clocked in at $918 million, up 34 percent $684 million in the second quarter of 2010. Average revenue per user climbed from $12 to $15, driven by a large increase in the average minutes of use to 373 minutes per month, up from 210 in the year-ago period. Overall, the company said Straight Talk plans continue to gain acceptance in the marketplace.
For more:
- see this América Móvil release (PDF)
- see this Seeking Alpha transcript
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