Sprint stems subscriber losses, cash drain continues

Wed, 04/28/2010 - 8:25am
Maisie Ramsay, Wireless Week

Sprint Nextel managed to rein in its subscriber losses in the first quarter, but its cash hemorrhage continued as the country’s third-largest carrier struggled to regain profitability.

Sprint Nextel’s losses widened to $865 million in the first quarter ended March 31 from a loss of $594 million during the same period last year, as gains in the company’s prepaid business failed to offset higher spending on its wireless network and slumping ARPU.

Sprint’s string of losses goes back to the fourth quarter of 2007, when the company lost $29.32 billion on a massive write-down of its 2005 acquisition of Nextel.

The company lost 578,000 postpaid customers in the first quarter, an improvement over last year when it lost 1.25 million customers. Churn improved to 2.15 percent from 2.25 percent last year, but ARPU declined slightly to $55 from $56 last year.

Postpaid service revenue also slipped, falling to $5.54 billion from $6.06 billion last year. Prepaid sales rose dramatically to $893 million from $357 million last year, thanks to the acquisition of Virgin Mobile USA and iPCS during the fourth quarter of 2009.

Prepaid churn improved to stand at 5.74 percent, but ARPU fell to $27 from $31 last year. Prepaid net adds also fell to 348,000 new customers from 674,000 new customers last year.

Sprint’s prepaid subscriber base now stands at 11.03 million, due in large part to its recent acquisitions. Its postpaid subscriber base comprises 33.39 million customers.

Together with its wholesale customers, Sprint’s total customer base slipped 2 percent to 48.05 million customers. Overall, Sprint lost 75,000 subscribers in the first quarter compared with a loss of 182,000 subscribers last year.

In a statement, Sprint Nextel CEO Dan Hesse remained optimistic about the company’s financial performance.

“Sprint’s first-quarter results, including increased net operating revenues and significant year-over-year net postpaid subscriber improvements, show we continue to make progress in improving the business,” he said.

The stock market reacted favorably to Sprint’s earnings. The company’s shares rose 3.4 percent to $4.23 per share as of 10:15 a.m. EST.

More Broadband Direct 4/28/10:
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•  Sprint stems subscriber losses, cash drain continues
•  Real estate co. stays connected with Optimum Lightpath
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