The iPhone appears to be pulling its fair share at Sprint Nextel. Sprint sold 1.5 million iPhones in the first quarter of 2012, 44 percent of which were new customers.
And while the total number of customers on the Sprint platform grew almost 4 percent sequentially, including 263,000 postpaid net subscriber additions, 870,000 prepaid net subscriber additions and 785,000 wholesale and affiliate net subscriber additions, the company couldn’t manage to cut its losses altogether.
Net revenue was up 5 percent to $8.73 billion, from $8.31 billion in the year-ago quarter, but Sprint still managed a net loss of $836 million.
Sprint now counts 50.7 million total subscribers on its platform.
In a conference call, CEO Dan Hesse said Sprint is wrestling to find a good balance between increasing average revenue per user (ARPU) while not adversely affecting churn. The company reported best-ever retail postpaid ARPU of $62.55 on the Sprint platform, while postpaid churn on the Sprint brand settled in at 2 percent.
According to Hesse, fully 69 percent of Sprint customers own smartphones, but not all of them pay an additional $10 per month data charge because they bought those phones prior to the company’s implementation of the charge. Hesse said it’s enforcing little things like the $10 data charge that might adversely affect churn, while simultaneously driving up ARPU.
Hesse said he expects Sprint postpaid churn will continue to improve, while the Nextel brand will see worsening churn, as the company proceeds to decommission its iDEN network. To date, Sprint has taken approximately 1,300 iDEN sites off air and expects to shut down a total of 9,600 before the end of the third quarter.
Sprint reaffirmed the goals of its Network Vision initiative, saying that to date, the company has approximately 600 sites on air, which are meeting speed and coverage enhancement targets. The company said it has zoning requirements completed for approximately 9,700 sites, and leasing agreements have been completed for close to 7,700 sites. Sprint expects to bring approximately 12,000 sites on air by the end of 2012 and to complete the majority of its Network Vision rollout in 2013.
Hesse said the company is not adjusting its guidance on the progress of the Network Vision initiative, saying that while things are going well, there are still “a lot of moving parts.”
Sprint said it expects to launch 4G LTE in six major cities by the middle of 2012, including Houston, Dallas, San Antonio, Atlanta, Kansas City and Baltimore. This week, Sprint launched its first two 4G LTE smartphones – the Galaxy Nexus and LG Viper 4G LTE – and earlier this month also announced the upcoming launch of HTC Evo 4G LTE.
All of this taken together left industry analyst Jeff Kagan underwhelmed, saying that Sprint has departed from the top tier of carriers.
“We have been watching the wireless industry grow and change over the years. It's time for a shift in the way we categorize the top competitors,” Kagan argued in commentary today, noting the extent to which AT&T Mobility and Verizon Wireless have pulled ahead of the pack.
Kagan said Sprint Nextel, which has long been considered a Tier 1, would be more adequately classified as a Tier 2 player. “If their performance improves, we can adjust back to the top three, but it has been years, and they are still struggling,” Kagan said.
Shares of the company’s stock rose 6 percent immediately following the announcement but had retreated to nearly flat at $2.48 in early morning trading.