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Service provider in Southeastern US reports adjusted EBITDA of $50.3 million for the quarter compared with $24.5 million in 2Q06

July 31, 2007

3 Min Read

BERWYN, Pa. -- SunCom Wireless Holdings, Inc. (NYSE: TPC) today reported operating and financial results for the second quarter of 2007. Adjusted EBITDA was $50.3 million for the quarter compared with $24.5 million in the second quarter of 2006, while Adjusted EBITDA margin expanded to 22.8 percent from 20.5 percent in the first quarter of 2007 and from 13.3 percent in the second quarter of 2006. Cash flows used in operations were $12.5 million for the three months ended June 30, 2007, compared with a use of $20.8 million for three months ended June 30, 2006.

Service revenue for the quarter was $195.7 million compared with $164.4 million in the second quarter of 2006. The increase in service revenue was the result of higher ARPU and a greater number of subscribers compared with the second quarter of 2006. ARPU increased to $57.21 in the second quarter from $55.70 in the first quarter of 2007 and from $52.89 a year ago, reflecting higher access revenue, increased feature revenue, such as SMS messaging and downloadable ring tones, as well as increases in miscellaneous revenue. Net additions were 16,128 in the quarter and increased the Company's subscriber base almost 106,000 to 1,136,966 compared with 1,031,443 a year ago. Monthly churn for the second quarter 2007 was 2.4 percent compared with 2.2 percent in the second quarter of 2006. The increase in churn is primarily attributable to SunCom's prepaid service offering, which was introduced in only its domestic operations in the third quarter of 2006. In the second quarter in its domestic business, the Company added a net 5,526 prepaid customers, while postpaid subscribers increased by 11,810. Offsetting this strong growth in prepaid and postpaid subscriber additions was an 11,062 decrease in month-to-month subscribers, which is a predominantly credit- challenged sub-segment of the Company's subscriber base. The Company increased the access price and handset equipment pricing for these rate plans to improve profitability, which had the impact of reducing gross adds and increasing churn for this sub-segment. At June 30, 2007, less than 5 percent of its domestic subscriber base was on one of these rate plans.

Roaming revenue increased 29 percent to $25.1 million from $19.5 million in the second quarter of 2006 on the strength of higher roaming volumes and increased data traffic. Roaming minutes of use increased 32 percent to 338.6 million in the quarter from 256.4 million minutes a year ago. Since the beginning of the third quarter of 2007, SunCom has seen roaming volumes from its largest roaming partner decline. After discussions with this partner, SunCom estimates that this change will result in an approximate 25 percent decrease in volumes, or approximately $5 million less roaming revenue, on a quarterly basis, as compared to the second quarter of 2007.

"We continue to see improving performance in our business, driven by higher subscriber counts and ARPU, as well as improved efficiencies. This provides further evidence that our strategy to attract these high-ARPU subscribers with value rate plans is the right one," said Michael E. Kalogris, Chairman and CEO of SunCom Wireless. "With six consecutive quarters of Adjusted EBITDA growth and margin expansion, we remain confident in the growth of SunCom."

Cash cost per user (CCPU) improved $2.43 to $37.47 compared with $39.90 in the second quarter of 2006. The decrease reflects the decommissioning of the Company's TDMA network and a reduction in interconnection expenses along with the increase in the Company's subscriber base.

Net loss for the quarter was $193.0 million, or $5.80 per share, which includes a loss of 182.9 million, or $5.50 per share, resulting from the debt- for-equity exchange. This compares to a net loss of $110.4 million, or $16.07 per share, a year ago. Excluding the loss on the debt-for-equity exchange of $182.9 million results in a net loss for the quarter of $10.1 million or $0.30 per share.

Capital expenditures for the quarter were $11.0 million compared with $30.9 million a year ago, and the Company ended the second quarter of 2007 with $184.6 million of cash and short-term investments.

SunCom Wireless Inc.

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