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October 19, 2006

Cingular Wireless Q3 and 3G

Posted by Tricia Duryee at 10:37 AM

Cingular Wireless reported third quarter financial results today that set a record for net income.

The Atlanta-based company, a joint venture of AT&T and BellSouth, said it made a profit of $847 million for the third quarter, a 280 percent year‐over‐year increase. Revenue during the period totaled $9.6 billion.

What was interesting was the company's increase in ARPU, or average revenue per user. It increased slightly to $49.76 a month from $49.65 in the year‐ago period. But most of the growth came from selling more data services. Data ARPU increased 46 percent year‐over‐year and 10 percent sequentially to $6.32.

Cingular said the growth came from the increasing popularity of downloadable games, ringtones, mobile instant messaging, mobile e-mail, photo messaging, and media bundles. In addition, text messaging continued to grow. In the third quarter of 2006, Cingular had 28 million active data customers, and delivered 138 million multi‐media messages and 10 billion text messages.

The increase came as the company's roll-out of its high-speed data network called HSDPA. The 3G service, which offers speeds averaging 400 to 700 kilobits per second, is available in 115 cities in and 52 major markets in 28 states and the District of Columbia.

Customers can use the 3G connections to access e‐mail and information services or watch streaming video clips using Cingular Video.

At WiMax World last week, the success of 3G was the subject of hot debatey. Detractors said 3G will not take off because the business models aren't there. The equipment is too expensive to spur widespread adoption, whereas WiMax promises greater speeds and capacity at lower costs.

But it seems that consumers are interested in 3G data services if Cingular's customer is spending $6 a month on average. But for the carriers to make money on the billions invested in the new networks, I imagine it will have to grow much higher than that.

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Tricia Duryee
Tricia Duryee
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