Sprint's loss widens to $1.4B as investment in Network Vision upgrades grows, while unlimited data plans help iPhone sales

Dan Jones, Mobile Editor

July 26, 2012

3 Min Read
Sprint  Hunkers Down for Network Vision

Sprint Corp. (NYSE: S)'s second-quarter losses continued to widen as it spends more on its Network Vision 3G and 4G upgrade and shuts down its Nextel network.

The numbers
On Thursday morning, the company reported a second-quarter loss of US$1.37 billion, or $0.46 a share, on revenue of $8.84 billion, compared to a loss of $863 million, or $0.29 a share, on revenue of $8.31 billion, a year ago. Analysts polled by Thomson Reuters had expected the company to post an EPS loss of $0.40 on revenue of $8.73 billion.

Among the factors cited in the loss were charges of $782 million related to its Network Vision deployment and Nextel iDen phase-out, including $184 million related to Nextel lease costs. The company also took a $204 million impairment charge on its Clearwire LLC (Nasdaq: CLWR) investment.

The network
Nonetheless, CEO Dan Hesse and other Sprint executives on the earnings call stressed that 2012 and 2013 will still be an investment phase as the carrier spends on deploying 4G Long Term Evolution (LTE) and 3G improvements across its coverage footprint.

Sprint's capital expenditure stood at $1 billion for the quarter, compared to $546 million in the same period in 2011. It spent $704 million on the upgrades as well as around $230 million on additional data capacity for its new deployment and legacy network.

Sprint CEO Hesse laid out the importance of Network Vision to the company in the coming quarters on the call when asked about the possibility of more merger and acquisition activity in the wireless industry.

The Sprint boss stressed that he saw more M&A activity as important in the sector. "The only thing we would want to avoid is anything that would stretch our network organization between now and 2013," he stated.

Sprint says that it now has more than 2,000 Network Vision sites on-air. Construction is underway or ready to start at nearly 6,300 sites, with zoning complete at nearly 13,900 sites and leasing on 12,700 sites done.

The operator has already completed its 2012 target for Nextel network thinning with 9,600 sites off the air. It has also launched its first 15 LTE markets and says the build is on track.

Sticking to unlimited
Hesse was adamant on the call that one of the other major planks of the Sprint strategy -- unlimited data plans for its smartphone customers -- will remain in place, at least for the time being. He fielded analyst questions on the call about unlimited data by saying that Sprint has "no plans" to change its rate structure.

In fact, the Sprint chief attributed the fact that iPhone sales held steady at the carrier to the unlimited plans. Sprint sold 1.5 million iPhones in the second quarter, the same as the first three months of the year. AT&T Inc. (NYSE: T) and Verizon Wireless still beat Sprint in sheer numbers of the Apple phone sold but saw totals drop off from their previous quarters. (See Verizon CFO Is a Tease on iPhone Timing and AT&T Sells 5.1M Smartphones in Q2.)

"I attribute it to the simplicity of our rate structure and unlimited data plans," said Hesse of the iPhone sales. "Customers like simplicity."

Nonetheless, Sprint is keeping a close eye on its rivals' move to shared data plans, Hesse allowed. "We don't currently have any plans to change our rate structure ... but we will evaluate that month-by-month and quarter-by-quarter."

For more

— Dan Jones, Site Editor, Light Reading Mobile

About the Author(s)

Dan Jones

Mobile Editor

Dan is to hats what Will.I.Am is to ridiculous eyewear. Fedora, trilby, tam-o-shanter -- all have graced the Jones pate during his career as the go-to purveyor of mobile essentials.

But hey, Dan is so much more than 4G maps and state-of-the-art headgear. Before joining the Light Reading team in 2002 he was an award-winning cult hit on Broadway (with four 'Toni' awards, two 'Emma' gongs and a 'Brian' to his name) with his one-man show, "Dan Sings the Show Tunes."

His perfectly crafted blogs, falling under the "Jonestown" banner, have been compared to the works of Chekhov. But only by Dan.

He lives in Brooklyn with cats.

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