Sprint Loses More Customers in Q3

Third-ranked cellular operator posts a Q3 loss of $326M with Q4 not looking much more promising

Dan Jones, Mobile Editor

November 7, 2008

3 Min Read
Sprint Loses More Customers in Q3

Sprint Corp. (NYSE: S) has lost another 1.3 million wireless customers in total over the third quarter of this year as users continue to desert the third-ranked cellular operator in the U.S. in droves.

The Overland Park, Kan.-based carrier says that it lost 1.1 million monthly contract subscribers this quarter, who generally pay more than pay-as-go users, while its user retention “churn” rate remains high at 2.15 percent, up from 2 percent in the second quarter. Overall, its total subscriber base is close to 50 million, down around 3.5 million from 54 million wireless customers a year ago.

Sprint posted a third-quarter net loss of $326 million or $0.11 per share, compared to net profit of $64 million or $0.02 per share in the year-ago quarter. Revenue for the quarter fell 12 percent to $8.81 billion.

The firm’s wireless business declined 13 percent year-on-year to $6.8 billion in revenue. The operator said that its average revenue per monthly mobile contract was flat at $56, with voice losses being offset by increased data revenues.

Sprint expects “continued pressure on post-paid subscribers in the fourth quarter” but says that overall customer additions could stabilize while the churn rate remains the same. The firm is also anticipating “slight downward pressure” on post-paid ARPU in the fourth quarter.

CEO Dan Hesse said on today’s conference call that the operator has “yet to turn the corner” with its third-quarter numbers. The operator highlighted, however, customer service improvements saying that calls to customer service centers are down 20 percent through the year.

Hesse and crews aim now is to keep pushing its customer service and CDMA and iDEN network improvements along with better customer service to attract “high-value customers.” If the company manages to add customers it could increase capex spending. “An increase is success based,” Hesse noted.

Sprint recently said that it will keep its iDEN network rather than selling off the Nextel network. The company now says that it will operate the network into the “foreseeable future” and use the bandwidth to offer further low-cost services via its Boost Mobile unit. (See Sprint to 'Retain' & Spruce Up iDEN.)

The expected impending closure of its WiMax asset merger with Clearwire LLC (Nasdaq: CLWR) should help to get its “4G” costs off its book. The company said that it is seeing a $75 million EBITDA quarterly loss on WiMax at the moment. (See FCC Approves Sprint-Clearwire Deal.)

The company's wireline business, meanwhile, reported a 24 percent drop in income to $120 million, while quarterly revenues fell 2 percent to $1.58 billion. “We’re starting to see that business customers are a little bit slower in decision making,” says Dan Dooley, head of Sprint’s wireline unit. “We’re looking at our growth in 2009 coming from value-added services like voice over IP.”

Finally, the operator has swapped an existing $6 billion credit facility with a $4.5 billion one and has paid off $1 billion of its outstanding loan amount under an amended credit agreement announced Friday.

— Dan Jones, Site Editor, Unstrung

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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