Earthlink 2004 Annual Report Download - page 33

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operations to commence immediately thereafter. The joint venture will be capitalized with $440.0 million of partner investments over the next
three years. Pursuant to SK-EarthLink’s Contribution and Formation Agreement, EarthLink has committed to invest an aggregate of $220.0
million, including $180.0 million of cash and $40.0 million of non-cash assets, including customers, contractual arrangements and agreements
to prospectively market SK-EarthLink’s services.
Key Operating Metrics
We utilize certain non-
financial and operating measures to assess our financial performance. Terms such as churn and average revenue per
user (“ARPU”) are terms commonly used in EarthLink’s industry. The following table sets forth subscriber and operating data for the periods
indicated:
(a)
Subscriber counts do not include nonpaying customers. Customers receiving service under promotional programs that include periods of
free service at inception are not included in subscriber counts until they become paying customers.
(b)
Due to the reduction in revenue per subscriber under our arrangement with Charter Communications (“Charter”), EarthLink excluded
approximately 152,000 Charter wholesale broadband subscribers from its total paying subscriber count beginning in the three months
ended September 30, 2003. See
30
As of December 31,
2002
2003
2004
Subscriber Data (a)
Narrowband subscribers
4,035,000
3,984,000
3,880,000
Broadband subscribers
779,000
1,061,000
1,364,000
Web hosting accounts
173,000
161,000
144,000
Total subscribers at end of year
4,987,000
5,206,000
5,388,000
Year Ended December 31,
2002
2003
2004
Subscriber Activity
Subscribers at beginning of year
4,843,000
4,987,000
5,206,000
Gross organic subscriber additions
2,043,000
2,706,000
3,137,000
Acquired subscribers
316,000
76,000
12,000
Adjustment (b)
—
(
152,000
)
—
Churn
(2,215,000
)
(2,411,000
)
(2,967,000
)
Subscribers at end of year
4,987,000
5,206,000
5,388,000
Churn rate (c)
3.8
%
4.0
%
4.6
%
Narrowband Data
Average subscribers (d)
4,066,000
3,930,000
3,965,000
Service ARPU (e)
$
20.70
$
19.70
$
18.21
Churn rate (c)
4.2
%
4.6
%
5.3
%
Broadband Data
Average subscribers (d)
610,000
931,000
1,215,000
ARPU (f)
$
34.23
$
32.31
$
28.77
Churn rate (c)
1.6
%
1.7
%
2.5
%
Web Hosting Data
Average accounts (d)
173,000
166,000
153,000
ARPU (f)
$
25.61
$
25.01
$
25.84
Churn rate (c)
3.1
%
2.8
%
2.4
%