Atlantic Tele-Network (News - Alert) Inc. is experiencing some growing pains – or possibly a better term is “shrinking pains.” While the company is in the process of transitioning its Alltel (News - Alert) customers to its own operating platform, billing systems and customer-care centers, it also continues to lose subscribers, though perhaps not as quickly as it was last quarter. ATN purchases the assets of wireless carrier Alltel in April of 2010 and has been getting busy with the complex business of consolidating platforms.

RCR Wireless (News - Alert) is reporting today that Alltel counted 638,839 retail subscribers as of June 30. Unfortunately, it's also reporting that it has lost 168,488 subscribers since June of 2010.

“This was a period of significant accomplishment for ATN, as we completed the transition of our Alltel customers to our own operating platform, billing system and customer care centers in late July,” said ATN CEO Michael Prior. “The completion of this conversion allows us to eliminate the overlapping expenses incurred under our Transition Services Agreement with Verizon (News - Alert) that have negatively affected our results over the past several quarters. As anticipated, second-quarter operating results included the largest expenses of our transition program, but resulted in only a modest sequential decline in margins for the period due to growth and cost efficiencies in other areas. We were also pleased to see continued improvement in many of our retail wireless operating metrics, including ARPU and churn, particularly on the postpaid side.”

Prior also warned that the next quarter may not be rosy, either. “While the residual impact of TSA payments and overlapping transition expenses incurred in July will affect our third quarter of 2011 costs, with the transition now complete we expect U.S. wireless segment margins to progressively improve in the second half of this year,” he added.

The losses would appear to be equally split between postpaid subscribers (84,008) and prepaid subscribers (84,480), reports RCR Wireless. While Alltel continues to lose customers quarter to quarter, the size of the loss is declining. Alltel lost 35,241 customers from March to June. Blended average revenue per user was up $2.77 from a year ago to $47.90. Postpaid ARPU increased 62 cents from the year-ago period to $54.47. Postpaid churn stood at 2.4 percent while blended churn was 3.7 percent.

Prior did note that the company expects things to get better.

“Our ability to build a sustainable domestic retail customer base has been significantly enhanced by the migration of our customers to our new customer care and information technology platform,” he said. “While our focus continues to be on providing superior customer experience, network quality and coverage, we look forward to taking full advantage of the strong marketing expertise we have within our organization to launch new offerings and promotions customized for our subscribers' needs. Looking forward, we expect subscriber metrics and retail operating margins to progressively improve in the next few quarters as we work toward optimizing our service offerings and our cost structure.”

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