Sprint Nextel Corp.
(NYSE: S) today reported wireless subscriber results for the fourth
quarter of 2007, announced initial plans to streamline its business as
part of an ongoing review of its operations and market approach, and
provided an update on its annual assessment of the goodwill recorded
on its financial statements.
For the fourth quarter Sprint Nextel reported a net gain of
500,000 subscribers through wholesale channels, growth of 256,000
Boost Unlimited users and net additions of 20,000 subscribers within
affiliate channels. These gains were offset by net losses of 683,000
post-paid subscribers and 202,000 traditional pre-paid users.
In the fourth quarter, post-paid churn was 2.3 percent. Compared
to the third quarter, improved voluntary churn in both the CDMA and
iDEN customer bases was offset by higher involuntary churn. At the end
of 2007, Sprint Nextel served a total subscriber base of 53.8 million
subscribers including 40.8 million post-paid, 4.1 million traditional
pre-paid, 500,000 Boost Unlimited, 7.7 million wholesale and 850,000
subscribers through affiliates.
Anticipating continued downward pressure on subscriber trends,
revenues, and profitability in 2008, Sprint Nextel also announced
initial plans to streamline the business in coming months. These plans
call for job reductions across the company including approximately
4,000 internal positions and reduced utilization of outsourced
services and contractors. The company also expects to eliminate more
than 4,000 third-party distribution points and to close approximately
125, or 8 percent, of its company-owned retail locations. The company
has approximately 20,000 total distribution points, including nearly
1,400 company-owned retail locations.
Sprint Nextel currently expects these actions to reduce its
internal and external labor costs by an annualized rate of $700-$800
million by the end of 2008. The employee headcount reductions are
expected to be completed in the first half of the year and will
include management and non-management positions throughout the
company. The company will offer a voluntary separation plan for its
employees, and displaced employees will receive separation pay and
outplacement and other services. The company expects to record a
first-quarter charge for severance costs associated with the workforce
reduction.
Sprint Nextel is currently performing its annual assessment of the
goodwill recorded on its financial statements and expects to conclude
this process prior to the release of its fourth-quarter earnings
report. Given current market conditions, particularly the recent
decrease in the company's stock price, Sprint Nextel could determine
that it will record a non-cash impairment charge related to goodwill
in the fourth quarter 2007. Any such charge would have no affect on
either the company's current cash balance or future cash flows.
Sprint Nextel currently expects to announce fourth-quarter and
full-year 2007 results on Feb. 28.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and
wireline communications services bringing the freedom of mobility to
consumers, businesses and government users. Sprint Nextel is widely
recognized for developing, engineering and deploying innovative
technologies, including two robust wireless networks serving
approximately 54 million customers at the end of 2007;
industry-leading mobile data services; instant national and
international walkie-talkie capabilities; and a global Tier 1 Internet
backbone. For more information, visit www.sprint.com.
Safe Harbor
This news release includes "forward-looking statements" within the
meaning of the securities laws. The statements in this new release
related to the workforce reduction, streamlining of distribution
points and the annual assessment of goodwill, as well as other
statements, that are not historical facts are forward-looking
statements. The words "estimate," "project," "forecast," "intend,"
"expect," "believe," "target," "providing guidance" and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements are projections reflecting management's
judgment and assumptions based on currently available information and
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by forward-looking
statements.
Future performance cannot be assured. Actual results may differ
materially from those in the forward-looking statements due to a
variety of factors, including, but not limited to: competitive
conditions and market acceptance of Sprint Nextel's products and
services; the impact of adverse network performance; customer growth
and retention; the availability of devices; future results of
operations; the timing of various events and the economic environment;
and other risks referenced from time to time in Sprint Nextel's
filings with the Securities and Exchange Commission, including in the
Form 10-K for the year ended December 31, 2006, in Part I, Item 1A,
"Risk Factors."
Sprint Nextel believes the forward-looking statements in this
press release are reasonable; however, you should not place undue
reliance on forward-looking statements, which are based on current
expectations and speak only as of the date of this release. Sprint
Nextel is not obligated to publicly release any revisions to
forward-looking statements to reflect events after the date of this
release.