Cricket Wireless 2012 Annual Report Download - page 69

their handset would activate a new line of service to receive a discount on the handset as well as a free month of
service and would then terminate their existing service, which had the effect of increasing our gross customer
additions and churn. The year-over-year decrease in gross customer additions was also driven by expected
decreases in the number of new Cricket Broadband customers due to increased device pricing, reduced marketing
emphasis and increased network management initiatives. The year-over-year decrease was partially offset by an
increase in the number of new voice customers as a result of customer acceptance of the “all-inclusive” service
plans and smartphones that we introduced in the second half of 2010, as well as our new Muve Music service that
we introduced in 2011.
Net Customer Additions (Losses)
Net customer losses for the year ended December 31, 2012 were 637,229 compared to net customer
additions of 415,834 for the prior year. The change was primarily due to the decrease in gross customer additions
discussed above and higher churn levels.
Net customer additions for the year ended December 31, 2011 were 415,834 compared to 241,546 for the
prior year. The 72.2% increase in the number of net customer additions was primarily due to a decrease in
customer churn of approximately 90 basis points, driven by customer acceptance of our “all-inclusive” service
plans for Cricket wireless service and the smartphones that we introduced in the second half of 2010, as well as
our new Muve Music service that we introduced in 2011, partially offset by an increase in the number of net
customer deactivations for our Cricket Broadband service due to increased device pricing, reduced marketing
emphasis and increased network management initiatives.
Service Revenues
Service revenues increased $118.2 million, or 4.2%, for the year ended December 31, 2012 compared to the
prior year. This increase resulted from a 1.3% increase in the weighted-average number of customers and a 3.7%
increase in ARPU, primarily due to increased uptake of higher-priced service plans for our smartphones and
Muve Music service.
Service revenues increased $346.7 million, or 14.0%, for the year ended December 31, 2011 compared to
the prior year. This increase resulted from a 9.2% increase in the weighted-average total number of customers
due to customer growth in our existing markets and the contribution of approximately 323,000 customers by
Pocket to STX Wireless in October 2010 in connection with the formation of our South Texas joint venture, as
well as a 7.8% increase in ARPU. The increase in ARPU was primarily attributable to increased uptake of our
higher-priced service plans for smartphones that we introduced in the second half of 2010 as well as the impact
of our new Muve Music service, partially offset by a decrease in average total customers for our Cricket
Broadband service and the elimination of certain late payment and reactivation fees in the second half of 2010.
Equipment Revenues
Equipment revenues decreased $47.0 million, or 19.4%, for the year ended December 31, 2012 compared to
the prior year primarily due to an 8.9% decrease in the number of devices sold to new and upgrading customers,
which was primarily due to our decreased gross customer additions in the current year period as discussed above.
Equipment revenues increased $27.2 million, or 12.7%, for the year ended December 31, 2011 compared to
the prior year. This increase was primarily due to an 8.7% increase in the number of devices sold to new and
upgrading customers as well as a 3.7% increase in average revenue per device sold. The increase in average
revenue per device sold was primarily due to increased sales of our smartphones and Muve Music enabled
devices that were launched in the second half of 2010.
55