Table 1: Financial Snapshot
|Net Income ($B)||-0.505||-0.594||-18%|
|Source: Sprint Nextel Inc.|
Table 2: Analyst Estimates
|Analysts' Consensus Estimate Q109||Actual Q109|
|Source: Thomson Reuters, Sprint Nextel Inc. *Denotes EPS before amortization.|
The third-ranked cellular operator is losing fewer customers overall, but monthly subscribers are still departing in droves, while some of the slack is taken up by pay-as-you-go customers, attracted by the reduced pricing on Sprint's Boost iDEN network offerings.
For the quarter, overall wireless customers declined by 182,000, including net losses of 1.25 million monthly subscribers -- that's nearly 1.1 million fewer customers than the operator lost in the same quarter last year. The improvement was mainly because Sprint added 764,000 pay-as-go iDEN customers and 394,000 wholesale and affiliate subscribers. It lost 90,000 customers that buy services as they go on Sprint's CDMA network.
Monthly subscribers who sign up for two-year contracts -- often described as "postpaid" customers -- are considered better revenue generators than pay-as-you-go (or "prepaid") users.
Sprint CEO Dan Hesse said on the operator's conference call this morning the carrier "must do better" in attracting and keeping monthly subscribers, but noted that the pay-as-you-go category had been significantly bolstered by the company's new Boost Unlimited plans. Announced in January, Boost Unlimited offers a flat $50 fee per month, with no contract, for unlimited talk and text on the old Nextel iDEN network.
Average Revenue Per User (ARPU) for monthly subscribers stayed stable at $56, thanks to the $100 a month "Simply Everything" plan for unlimited voice and data. Prepaid ARPU was approximately $31, compared with $29 last year.
For the next quarter, Sprint is predicting that an increasing number of wireless customers could choose prepaid services instead of postpaid services due to the "economic environment." Nevertheless, the company continues to expect that not only prepaid, but also postpaid and total subscriber full-year losses, should improve in 2009 as compared to 2008. Sprint didn't offer any update on when it will launch the much-anticipated Palm Inc. Pre. Several early summer dates have been punted by gadget blogs. (See Palm Pre: May 17th?.)
The operator now says it will start piggybacking on Clearwire LLC (Nasdaq: CLWR)'s mobile WiMax service this summer. The company has previously announced plans to launch WiMax service in Atlanta, Las Vegas, Chicago, Charlotte, Dallas/Ft. Worth, Honolulu, Philadelphia, and Seattle in 2009, and expects launch cities to include New York, Boston, Washington, Houston, and the San Francisco Bay Area in 2010.
— Dan Jones, Site Editor, Unstrung