Sprint loses 1.3M net subs, base drops to 50.5M
Sprint Nextel, in the midst of struggling to stabilize its customer base and improve its financial position, posted a net loss of $326 million in the third quarter, compared to a net income of $64 million in the third quarter last year, and said it had a net loss of 1.3 million subscribers in the quarter. Sprint CEO Dan Hesse reiterated that the company had been focused on retention of customers, improving the customer experience and paying down its debt more than it focused on acquisition of new customers. Wireless services revenue for the quarter was $6.8 billion, down 13 percent year-on-year.
Subscribers: The carrier saw a loss of 1.3 million net subscribers in the quarter, including a loss of 1.1 million postpaid subscribers and 329,000 prepaid users. By comparison, Sprint's two largest rivals saw large boosts in their net additions this quarter; AT&T Mobility added around 2 million subscribers and Verizon Wireless added 1.5 million. The carrier's base dropped to 50.5 million subscribers, which is the lowest the company has reported since first quarter 2006.
Churn: The company's post-paid churn was 2.15 percent, compared to 2.0 percent in the second quarter of 2008 and 2.3 percent in the third quarter of 2007. According to Technology Business Research analyst Kate Price, this increase in postpaid churn is due to seasonality and it is half that of historic third quarters, which indicates improvement.
ARPU: Wireless post-paid ARPU was flat at $56, compared to the first and second quarters of 2008, and down from $60 in the third quarter of 2007. For the quarter, data revenues made up about $13.50 of the total post-paid ARPU. That was mostly because of growth in CDMA data ARPU.
Company outlook: Hesse emphasized that the company paid down more than $1 billion in outstanding debt and was looking to stabilize itself with its customer base before expanding gross additions. He pointed to the launch of the One Click user interface on Sprint handsets, its Ready Now retail experience and Simply Everything voice and data plans as signs that the company was improving its customer experience. In addition, he noted that the company had closed customer service call centers as call quality improved. However, he acknowledged that the carrier would have to improve churn levels and reduce the decline in gross additions before it moved ahead in 2009 with increasing gross adds. "Turning this trend around in a recurring revenue business happens gradually," he said.
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