Sprint losses mount as wireless weakens

Mon, 05/12/2008 - 8:25am
Brian Santo

Sprint Nextel reported first quarter revenue of $9.3 billion, an 8 percent decline compared to $10.1 billion reported in the first quarter of 2007 and a 5 percent sequential decline. That led to a loss of $505 million, more than double the $211 million loss reported in Q1 ’07.

The company said its wireless operations are bringing in less money. Total wireless subscribers declined by 1.09 million, to end the quarter with 52.8 million. ARPU was lower, as well, the company said, due to “aggressive market pricing” – presumably a reference to the company’s introduction of a flat-fee all-you-can-eat plan.

Post-paid ARPU continues to be impacted by customer migrations to lower-priced plans, Sprint said, a higher-than-average ARPU in deactivating subscribers, and increased customer concessions to improve retention. First quarter ARPU was also impacted by lower fee-based revenues and seasonally lower usage.

During the quarter, Sprint lost its contract with Qwest, which has been private-labeling Sprint wireless services. Qwest, which represents over wireless 800,000 customers, signed a new contract with Verizon Wireless.

Shortly thereafter, Sprint announced a WiMAX partnership with Clearwire, Intel, Google, Bright House Networks, Comcast, and Time Warner Cable. The three MSOs will also resell Sprint cellular services, and may eventually compensate for the loss of Qwest. None of those actions would have had an affect on Sprint’s first quarter results.

Referring to the WiMAX deal, Sprint Nextel CEO Dan Hesse said, “We have strengthened our hand with last week's 4G announcement, which captures and leverages the value of Sprint's sizable spectrum holdings, provides Sprint with additional financial flexibility, gives us a time-to-market advantage over our competitors in the important growth area of wireless broadband, and allows Sprint management to focus our resources and attention on improving the performance of our core business.”

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