McCaw Cellular Communications Inc expects its total cellular customer subscriber base to rise to more than 2m at the end of the third quarter, compared to 1.42m on June 30, Reuter reporter Samuel Perry reports from Kirkland, Washington – and the company is looking to a multitude of networking features to spur revenue growth for the heavily-indebted dominant player in the US cellular telephone market. The company, where British Telecommunications Plc has 225, is looking to the new services to expand the US market, where cellular phones have penetrated less than 5% of households. We need to slice it and dice it so we can exploit the entire area under the demand curve, said McCaw chief financial officer Peter Curry. Today we have ‘one size fits all’ cellular service, Curry said, adding that the industry could instead provide some customers with a simple service, while others could pay a premium for call waiting, voice mail systems and other additions. Curry declined to project future results for McCaw, which analysts do not expect to turn a profit in its core cellular businesses before the mid-1990s at the earliest. In the second quarter ended June 30, revenues based on McCaw’s proportional share of core cellular operations nationwide rose 29% to $313.6m. Overall, including the fully-consolidated results of LIN Broadcasting, in which it owns a 52% stake, McCaw reduced its deficit in the second quarter to a loss of $0.49 a share from a $0.77 a share loss in the year-earlier period.
Cash flow
Cash flow on McCaw’s proportional share of cellular businesses before marketing expenses in the quarter was $214.6m, 68.5% of total revenue. Curry said he expected McCaw eventually to reduce costs of acquiring new customers and to increase the traffic on its systems by offering new services. I don’t think we need to pay as much for each nose that we bring in, he said. McCaw has been targeting the huge, untapped corporate market – with partners it has begun building its network that will enable access nationwide instead of by area. This fits with Craig McCaw’s vision of enabling telephone systems of the future to reach individuals universally, without having to have different numbers for each separate system (such as cellular, radio, land line or marine radio). McCaw expects use of cellular systems to send and receive data at more than double the speed of existing modems, within the next 12 months, and projects that data will grow to 40% of cellular traffic by the year 2000. As reported, McCaw has also teamed with General Motors Corp’s Hughes Aircraft Co to provide an airliner phone system to rival GTE Corp’s Airfone system and is a stakeholder in a consortium that plans to launch a satellite in 1994 to provide cellular service to remote areas of North America out of reach of current units. In a marketing experiment, McCaw has provided cellular telephones to 200 residents of Ashland, Oregon, charging essentially land-line prices for calls within the neighbourhood and more over greater distances using technology that the company says is more advanced that the emerging Personal Communications Network technology to see whether completely wireless telephone service is feasible and acceptable. All this stuff we can do and are doing, Curry said. We are pushing networking features at least as fast as others.
