Sprint Nextel loses 1.3M subs in fourth quarter

Sprint Nextel continued to bleed subscribers during the fourth quarter, dropping 1.3 million total customers, including 1.1 million post-paid and 314,000 prepaid. Additionally, the troubled carrier reported that it lost $1.6 billion during the quarter compared to the year-ago quarter when Sprint Nextel reported a loss of $29.3 billion primarily related to a $29 billion write-down to purchase Nextel.

In a non-metric fashion, CEO Dan Hesse said he was "pleased with the overall progress" the carrier made in improving customer experience and cash flow during a tough economy.

"Subscriber losses and revenue declines are still unacceptably high," he said, and Sprint is working to reverse that by focusing primarily on the customer experience and improving an image that was "tarnished back in 2007" and has combined with "uncertainty about the company's financial position" to put potholes in the carrier's road to recovery.

"It takes time for market perception about the company's actions in both these areas, the customer experience and financial stability, to catch up with reality," said Hesse, who has spent about a year trying to reverse that image, including appearing in a series of high profile Sprint television advertisements. "While we expect the economic conditions in 2009 to be challenging, we still believe that the wireless industry is relatively well positioned (and) I can assure you that I and my entire leadership team understand the urgency of improving our relative performance in this industry."

Hesse, like his counterparts throughout the wireless space, found positives in the quarter, including the smartphones which accounted of 30 percent of the company's handheld device sales with QWERTY devices representing 41 percent of fourth quarter sales. The PDA-device category now accounts for $80 of ARPU.

Here's a breakdown of some key metrics called out by Sprint:

Subscriber losses: Total wireless customers declined by a net of 1.3 million, including 1.1 million post-paid customers and 314,000 prepaid users. There was an increase of 146,000 wholesale and affiliate customers. In all, Sprint Nextel had 49.3 million customers at the end of 2008 compared to 53.8 million at the end of 2007.

Churn: Churn was a relatively steady 2.16 percent compared to 2.15 percent in the third quarter and 2.29 percent a year ago driven primarily by deactivations in business lines because of economic conditions and the improvement in the customer base's credit quality. Boost churn in the fourth quarter was 8.2 percent compared to 8.16 percent in the third quarter.

ARPU: Wireless post-paid ARPU was $56, and down about 4 percent from slightly above $58 in the fourth quarter of 2007. Prepaid ARPU in the quarter was $30 compared to $28 a year ago and $31 in the third quarter.

Forecast: The carrier said it expects both post-paid and total subscriber losses to improve and full-year capital expenditures to be consistent with 2008 levels, excluding WiMAX. The company said it expected to continue to generate positive Free Cash Flow during 2009.

For more
- see this release

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