"VZW?s Q2 growth hit by Amp?d write-off"

[terryjohnson16]

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Verizon losing $370,000 per day, urges bankruptcy court to shut down Amp’d service


By Kelly Hill
Story posted: July 19, 2007 - 11:31 am EDT

Verizon Wireless’ strong retail net additions were offset in part by trouble in its wholesale base during the second quarter, reducing the carrier’s 1.6 million retail net additions during the quarter to total net additions of 1.3 million subscribers.

Cowen & Co. analyst Tom Watts wrote in a research note that of the roughly 300,000 customers Verizon Wireless lost from resellers during the second quarter, about 175,000 were due to the carrier writing off the customer base of mobile virtual network operator Amp’d Mobile Inc., which declared bankruptcy in June. The rest of the lost wholesale customers were due to churn at other resellers, such as Tracfone Wireless Inc., Watts added.

Verizon Wireless confirmed that the majority of its losses came from Amp’d.

However, Verizon Wireless has a relatively low percentage of resellers in its customer base—only about 2.2 million subscribers out of a customer base of 62.1 million subscribers—which should protect the company from much risk.

“We view Verizon’s low exposure to wholesalers … as a positive relative to its competitors, particularly since the demise of ESPN’s MVNO and the bankruptcy of Amp’d suggests the MVNO model is not viable,” Watts wrote.

Meanwhile, Verizon Wireless is continuing its fight to cut its losses related to Amp’d Mobile. The MVNO filed for bankruptcy after it failed to make payments for network services to Verizon Wireless, leading the carrier to threaten to cut off Amp’d Mobile customers.

The carrier filed a request on Tuesday in the U.S. Bankruptcy Court for the District of Delaware to be allowed to cut off services to Amp’d. Verizon Wireless said that as of June 23, Amp’d Mobile had incurred $15.6 million in post-bankruptcy charges and is costing the carrier $370,000 a day, but still has not obtained debtor-in-possession financing that would assure the carrier that its bills will be paid. Verizon Wireless said it has received one payment of $2.5 million, which was supposed to placate the operator and allow Amp’d Mobile to have continued access to its network.

“Verizon Wireless should not be required to provide service for even one more day without … financing in place because, absent such financing, there is no possibility that Verizon Wireless will be paid for the post-petition services it continues to provide,” the carrier said in court filings. Verizon Wireless said that at the time of Amp’d Mobile filing for bankruptcy, the MVNO had run up $41 million in unpaid charges.

[Alex]

You win some you lose some I guess. Amp'd just couldn't hit the right key with potential customers. I wonder why Verizon didn't foresee this.