Sprint's Mixed Quarter
The market didn't react too kindly to the results -- shares were trading down nearly 4 percent this afternoon. Industry analysts, however, generally describe the results as solid.
"This was a good quarter... They added 2 million subscribers -- that's the same as Cingular," says Roger Entner, VP of wireless telecom at Ovum Ltd. "People need to learn to look at things in comparison."
The wireless unit -- which still operates under separate Sprint and Nextel brands -- saw average revenue per user (ARPU) from customers that pay a monthly bill (postpaid) fall to $63 from $65 a year ago.
When it was a separate company, Nextel used to report an average ARPU of over $70 a month from its business-oriented customer base. (See Walking, Not Running, to PTT.)
Ovum's Entner sees the drop as an indication of Sprint's efforts to sell to corporate customers and says it's a given that ARPU margins will get shaved.
"I think a lot of that has to do with enterprise," he says. "They cut prices for large deals."
Jack Gold at J.Gold Associates says that, although Sprint's ARPU is dropping, the company is still riding high compared to some of its competitors. "It's still reasonably high compared to Verizon's," says Gold. A postpaid Verizon user pays nearly $50 a month for service on average.
Many analysts view Sprint Nextel as one of the premier indicators of the health of the enterprise cellular market. (See But Is Everybody Growing?)
"They're still aggressively going after big corporate deals," says Gold, although he says it's too early to tell what effect the launch of the firm's independent services company, Sprint Enterprise Mobility Inc., in December, is going to have in this market.
"The other thing they've got going for them is MVNOs," opines Gold.
Mobile virtual network operators are one of the industry's buzz topics, whereby an established operator lets another firm run branded services over its network.
"They got into this market early, and they've stayed competitive," says Gold.
Sprint kicked off the MVNO market in the U.S. through its deal with Virgin Mobile USA Inc. (NYSE: VM) in 2002 and has added names like ESPN to its MVNO list over the years. (See Branson Targets US Teens.)
— Dan Jones, Site Editor, Unstrung