Sprint's ability to migrate iDEN subs to CDMA in focus for Q2

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When Sprint Nextel (NYSE:S) reports its earnings for the second quarter Thursday, a key area of focus for analysts and industry watchers will be how many Nextel iDEN subscribers it was able to successfully convert to its enhanced CDMA network.

Sprint is expected to report improved subscriber numbers on its "Sprint platform" (CDMA, WiMAX and LTE) but will likely report lower subscriber figures for the "Nextel platform" on its IDEN network, which the company is in the process of decommissioning. For most of the year Sprint has been working to convince iDEN subscribers to stick with Sprint and migrate to its enhanced push-to-talk solution on its CDMA network.

"How Sprint fares on this critical dimension will be a key metric to watch when the company reports on Thursday," Sanford C. Bernstein analyst Craig Moffett wrote in a research note. "The bull thesis for Sprint rests on the idea that it can return to sustainable growth once iDEN is finally behind it."

According to the AP, Citigroup's Michael Rollins expects Sprint to report losing 550,000 postpaid Nextel subscribers and gain a net 350,000 postpaid Sprint subscribers.

Sprint added 1.1 million total net customer additions in the first quarter, its sixth consecutive quarter with more than 1 million net subscriber additions. Sprint added 263,000 net postpaid customers to its Sprint platform during the quarter, but lost 455,000 net postpaid customers on its Nextel platform, leading to a total postpaid net subscriber loss of 192,000. The company added 489,000 net prepaid subscribers during the quarter, which included net additions of 870,000 prepaid Sprint platform customers, offset by net losses of 381,000 prepaid Nextel platform customers. Sprint had 6 million iDEN subscribers remaining as of the end of the first quarter.

In May Sprint said it would take 9,600 iDEN sites offline by the end of the third quarter, and would completely turn off its iDEN network as soon as June 30, 2013. The shutdown of the iDEN network, which Sprint has been discussing since late 2010, is one piece of its Network Vision upgrade, which centers on the deployment of new, multi-mode base stations that can support LTE.

The main draw of iDEN was Direct Connect, a push-to-talk service targeted at business users that supported walkie-talkie style conversations. Sprint is currently working to migrate its iDEN users onto its CDMA network, where it recently launched a refreshed PTT service developed by Sprint and Qualcomm (NASDAQ:QCOM). Sprint said its new Direct Connect service, which rides on its 1900 MHz spectrum, offers improved in-building coverage and will triple the square-mile reach of its current iDEN-based PTT service.

For more:
- see this Kansas City Business Journal article
- see this AP article
- see this WSJ article (sub. req.)

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