Sprint notches 1.1M subs in Q1, but struggles against Verizon iPhone

Sprint Nextel (NYSE: S) added 1.1 million net subscribers in its first quarter, pushing forward with the momentum it generated in the fourth quarter. However, Sprint lost around 114,000 net postpaid subscribers during the quarter.

Click here for key stats from Sprint's first quarter.

Click here for key stats from Sprint's first quarter.

Sprint CEO Dan Hesse said that despite Verizon Wireless' (NYSE:VZ) launch of Apple's (NASDAQ:AAPL) iPhone 4, and AT&T Mobility's (NYSE:T) competitive reaction, Sprint continued to see improvement in customer service metrics and reported its best ever postpaid churn numbers. However, Hesse noted that the Verizon iPhone launch "did have a notable impact on our net add performance for the quarter."

Hesse also used Sprint's quarterly earnings conference call to reiterate Sprint's opposition to AT&T's proposed $39 billion acquisition of T-Mobile USA. The Sprint chief said the company will make a compelling, quantitative case for why the deal should not go through, though he did not disclose details.

Here is a breakdown of Sprint's key quarterly metrics:

Network modernization: Sprint reiterated that it is testing its new multi-mode base stations as part of its Network Vision network modernization plans. The company plans to deploy the new base stations sometime in the fourth quarter of 2011 in eight of its largest markets, which is later than the August timeframe that Sprint had given during its fourth-quarter earnings conference call. Sprint will take "a very holistic view" of the economics of any potential spectrum hosting deals or network-sharing partnerships. "It's too early to say whether we would think of it as a separate line of business," Hesse said. "It could potentially be at some point in the future, but we haven't crossed that bridge yet." 

Rumors have indicated Sprint is in discussions with Clearwire and LightSquared for possible network-sharing deals.

Subscribers: Sprint added a total of 1.1 million net wireless customers in the quarter, which included net additions of 732,000 retail subscribers and net additions of 389,000 wholesale and affiliate subscribers. Sprint reported a net loss of 75,000 wireless customers in the first quarter of 2010.

Despite the gains, Sprint lost around 114,000 net postpaid subscribers during the quarter--the gains in Sprint-branded customers did not offset the company's losses on the Nextel brand. While the figures are a notable improvement over Sprint's performance in the first quarter of last year, the postpaid losses are a step back from the fourth quarter of 2010, when Sprint added 58,000 net postpaid customers--the carrier's first net postpaid additions since the second quarter of 2007.

Sprint added 846,000 net prepaid subscribers during the quarter, which included net additions of 1.4 million prepaid CDMA customers, offset by net losses of 560,000 prepaid iDEN customers. Sprint served over 51 million customers at the end of the quarter.

The company reiterated that it expects postpaid subscriber net additions for 2011 and to improve total wireless subscriber net additions in 2011, compared with 2010.

Finances: Sprint said total revenues came in at $8.3 billion for the quarter, up 3 percent from its $8.08 billion in the first quarter of 2010. Wireless service revenues clocked in at $6.6 billion for the quarter, an increase of around 3 percent compared with the year-ago quarter and the fourth quarter of 2010. The company reported a net loss of $439 million in the quarter, narrower than the $865 million loss it posted in the year-ago quarter.

ARPU: Sprint's wireless postpaid average revenue per user increased year-over-year and sequentially from $55 to $56. Sprint said that year-over-year, ARPU benefited from higher monthly recurring revenues as a result of a monthly $10 premium data add-on charge for smartphone customers that went into effect Jan. 30, and the greater popularity of fixed-rate bundle plans, partially offset by lower overage, casual data and text revenues. Sequentially, Sprint's ARPU increased primarily as a result of growth in premium data add-on revenues.

Churn: Sprint reported its best ever postpaid churn of 1.81 percent, compared with 2.15 percent for the year-ago period and 1.86 percent for the fourth quarter of 2010. Sprint attributed the improvement to progress in brand health, handset offerings and overall customer perception. Sprint also said that 9 percent of postpaid customers upgraded their handsets during the first quarter. Prepaid churn for the first quarter was 4.36 percent, Sprint's lowest in five years. The company said the year-over-year and sequential improvements in prepaid churn were primarily a result of the predominance of Boost Monthly Unlimited subscribers on CDMA and Assurance Wireless customers, who churn less than Virgin Mobile customers.

For more:
- see this release

Special Report: FierceWireless Q1 earnings page

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