EarthLink Reaches 1.4 Million BB Subs, Dial-up Decline Continues

During Q4 2004, EarthLink added 84,000 net broadband subscribers and 118,000 net value PeoplePC Online subscribers, while the net premium dial-up subscriber base decreased by 211,000 and Web hosting accounts declined by 5,000. Overall, EarthLink's customer base declined 14,000 during the fourth quarter.


EarthLink ended Q4 2004 with 5.4 million total subscribers, or a 3.5 percent increase from the fourth quarter of 2003. EarthLink ended the quarter with 1.4 million broadband customers, an increase of 28.6 percent from a year ago, and 3.9 million total narrowband subscribers, a decrease of 2.6 percent from the fourth quarter of 2003. Total narrowband subscribers include 876,000 PeoplePC Online subscribers, a 106.6 percent increase from December 31, 2003, and 3.0 million premium narrowband subscribers, a 15.6 percent decrease from the end of 2003.


Overall average monthly churn was 4.7 percent during the fourth quarter of 2004, level with the third quarter of 2004, but an increase from 4.1 percent in last year's fourth quarter. The increase in churn was primarily due to the higher level of gross subscriber additions over the past several quarters, primarily related to PeoplePC Online, whose shorter-tenured customers comprise an increasingly greater proportion of our customer base. Other factors include the higher percentage of newer customers for other services who tend to have a higher rate of churn during initial months of service and premium narrowband customers migrating to broadband services as retail broadband prices have declined.


For the quarter, total revenues were $338.1 million, a 3.0 percent decrease from the fourth quarter of 2003. Broadband revenues were $106.2 million, an increase of 8.1 percent over the prior year quarter, driven by the growth in broadband subscribers. Narrowband revenues were $208.6 million, a decline of 9.5 percent from the prior year quarter. The decline in narrowband revenues was primarily due to the shift in the mix of our narrowband customer base from premium narrowband subscribers to PeoplePC Online subscribers.


Eartlink said its recent wireless joint venture with SK Telecom sets its course toward next gen ISP services. In addition to offering innovative wireless services and applications, Earthlink said it planned to take advantage of the growing convergence of data and voice technologies to launch expanded VoIP and other wireline voice services.
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