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Sprint Bleeds Cellular Customers

More than 1 million cellular users deserted Sprint Corp. (NYSE: S) in the first quarter of 2008 as wireless continues to be a drag on the put-upon operator's financials. (See It's All Sprint's Fault.)

That exodus dented the carrier's top and bottom lines. Sprint reported revenues of $9.33 billion, down 8 percent from $10.1 billion in the same period last year, while its net loss grew to $505 million, or $0.18 a share, from a loss of $211 million, or $0.07 a share, in the first quarter of 2007.

Sprint's share price fell $0.26, nearly 2.8 percent, to $9.12 in early trading Monday.

Wireless
The Overland Park, Kan.-based cellular provider, which is the third-ranked operator in the U.S., saw its total wireless subscriber base decline by 1.09 million customers to 52.8 million during the first three months of 2008. Sprint lost 1.07 million monthly contract subscribers and 543,000 pay-as-you-go (prepaid) users, but gained 343,000 Boost Unlimited and 183,000 wholesale and affiliate subscribers.

Overall, the net loss is not as bad as the 1.2 million decline Sprint had expected. However, the operator's rivals, AT&T Inc. (NYSE: T), Verizon Wireless , and T-Mobile US Inc. , each added more than 1 million customers during the same quarter. (See T-Mobile Adds 2M in Q1.)

And further defections are expected. Sprint's new CEO, Dan Hesse, predicts the monthly subscriber performance will be only "marginally better" during the second quarter. "The turnover will take many quarters," stated Hesse on the operator's conference call this morning.

The company is trying new plans and initiatives, such as all-you-can eat voice and data plans, to improve customer satisfaction and reduce the numbers leaving the network.

The operator's earnings also continue to be hit by falling average voice revenue per user, with the company reporting lower ARPU on both its CDMA and iDEN networks. "Our ARPU decline has been driven by the fact that we are losing higher ARPU-paying customers," said Hesse.

Monthly contract wireless ARPU during the first quarter was a little under $56, a 6 percent decline compared to the year-ago period, and a 4 percent quarter-on-quarter decline.

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