AT&T WIRELESS REPORTS FIRST-QUARTER LOSS

Blames Earnings Drop on 'mLife' Campaign

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NEW YORK (AdAge.com) -- AT&T Wireless reported strong first-quarter operations and a loss of $176 million, both of which management attributed partly to the launch of its controversial "mLife" ad campaign.

"We added some octane with the 'mLife' campaign," Chairman-CEO John Zeglis said. The campaign achieved the objective of generating "buzz" for the company and increasing brand recognition, hits on AT&T Wireless' Web site and foot traffic in its stores, he said.

But the expense for the campaign, which kicked off during the Feb. 3 Super Bowl broadcast, was a drag on earnings, management said. The company showed a loss from operations of $16 million, which combined with accounting changes and other one-time items produced the $176 million loss.

The telecom posted

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a 12.5% increase in revenue to $3.36 billion, including a 14.6% increase in service revenue and a drop of 8.9% in equipment revenue. Management explained the service revenue hike came from the acquisition in February of Telecorp PCS and from 650,000 net subscriber additions, a 24% increase spurred by the mLife effort.

Both customer acquisition and advertising expenses will drop in the second quarter as AT&T Wireless returns to normal advertising schedule, Mr. Zeglis said.

The campaign, from WPP Group's Ogilvy & Mather, New York, went on air thanks to a last-minute deal with MetLife. The insurer had sued, claiming "mLife" infringed on its campaign, tagged "Have you met life today?" MetLife withdrew petition to stop the ads while AT&T Wireless withdrew trademark applications for mLife, and both sides continue discussions.

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