Sprint slows rate of subscriber losses in Q4

Sprint Nextel, battered by a string of quarterly subscriber losses, did not manage to return to overall subscriber growth in the fourth quarter--but the carrier did substantially slow the rate of its losses.

Click here for key stats from Sprint’s fourth quarter.Sprint CEO Dan Hesse acknowledged on the company's earnings conference call that the carrier still has significant improvements to make. But he said that if there was one word to sum up Sprint's fourth quarter, it would be "progress."

However, Sprint's shares fell close to 9 percent, to around $3.33 per share, following the carrier's announcement, possibly reflecting investor hopes of a stronger performance and brighter outlook.

Here is a breakdown of some of the carrier's key quarterly metrics:

Subscribers: The nation's No. 3 carrier said it lost a total of 69,000 net retail subscribers in the quarter. Net wireless customers declined by around 148,000, including net losses of 504,000 postpaid customers. That compares with 545,000 net wireless customer losses, including net postpaid subscriber losses of 801,000, in the third quarter. Significantly, the company said that in the fourth quarter Sprint-branded wireless services on its CDMA network gained more than 3,000 postpaid customers after a net transfer of 93,000 customers from its iDEN network.

Sprint gained a net 483,500 prepaid iDEN customers, offset by 48,500 prepaid CDMA customer losses. The carrier also lost 79,000 wholesale and affiliate subscribers as a result of its mobile virtual network operator partners.

In an interview with FierceWireless, Hesse said the competitive environment remains fierce and unpredictable, and that Sprint will continue to focus on things it can control, like the customer experience. He said the introduction of Sprint's "Any Mobile, Anytime" calling plan, which gives subscribers unlimited mobile-to-mobile access across all networks, helped the operator's subscriber numbers in the quarter. "That was probably the largest single contributor to the net add improvement in the fourth quarter," he said.

Financials: Total revenues were $7.87 billion, down 7 percent from $8.43 billion in the year-ago quarter. The company said the decline was primarily due to a lower postpaid wireless service revenues as well as wireline revenues. Wireless service revenues were $6.2 billion for the quarter, down 5 percent year-over-year and less than 1 percent sequentially. The company blamed the declines on fewer postpaid subscribers, partially offset by the increased number of prepaid subscribers. Sprint had a loss of $980 million, down from $1.62 billion in the year-ago quarter.

ARPU: Sprint said wireless postpaid average revenue per user was down year-over-year and sequentially from around $56 to $55. Sprint CFO Bob Brust said on the carrier's earnings call that the decline was due to seasonably lower revenue streams and the introduction of Any Mobile, Anytime calling plan--but he said the company does not expect further deterioration of postpaid ARPU. Data revenues made up $16.75 of overall postpaid ARPU in the fourth quarter, led by growth in CDMA data ARPU. Prepaid ARPU in the quarter was around $31, up from $30 in the year-ago period and down from $35 in the third quarter of 2009. Sprint said the inclusion of Virgin Mobile USA customers (Sprint acquired the MVNO in November) lowered prepaid ARPU overall, since Virgin's ARPU trails that of Sprint's Boost Mobile brand.

Churn: Postpaid churn in the quarter was 2.11 percent, down from 2.16 percent in the year-ago quarter and 2.17 percent in the third quarter of 2009. Prepaid churn in the fourth quarter of 2009 was 5.56 percent, down from 8.20 percent in the fourth quarter of 2008 and 6.65 percent in the third quarter of 2009.

4G: Hesse said expanding coverage and offering more devices will be key to Sprint's 4G strategy as a wholesale partner (and majority owner) of Clearwire. Clearwire plans to roll out mobile WiMAX to 120 million POPs by the end of the year. Additionally, Hesse promised that Sprint would offer dual-mode 3G/4G phones sometime this year.  "We need to get more markets turned up, and then we need to get more devices, and then we can make more progress in that regard," he said.

Hesse declined to comment on rumors about the HTC Supersonic, which has been speculated as Sprint's first dual-mode 3G/4G device. However, he said Sprint's planned dual-mode gadgets would take advantage of greater processing power, faster speeds and bigger screens--thereby giving customers a better video experience. "Because you can download data so much faster, the video experience will be so much better on 4G," he said. "And you'll see larger, higher-resolution screens generally on 4G."

Prepaid and iDEN: Sprint's Boost Mobile prepaid brand said in January it would offer its $50 monthly unlimited plan on Sprint's CDMA network. Hesse said that does not mean Sprint is abandoning its iDEN network, which was the initial network for Boost's unlimited play."We continue to support the iDEN network," he said. "We're going to be offering Boost on both iDEN and CDMA. It's an opportunity for us to just grow prepaid more."

Dan Schulman, the new head of Sprint's prepaid business, said that by the end of the second quarter the carrier will launch revamped prepaid offerings under the Boost, Virgin and Assurance Wireless brands, which will be aimed at specific market segments with different value propositions. He said the company expects to make "meaningful" progress with prepaid net adds throughout the year.

Mergers and acquisitions: Hesse declined to comment specifically on recent rumors that Leap Wireless might be looking for a buyer. "Generally, I think some consolidation will be healthy," he said, adding that being a national carrier is "very much a scale game."

Outlook: Sprint said it expects both postpaid and total subscriber losses to improve in 2010, as compared with 2009. The company will also spend $2 billion more on capital expenditures in 2010 than in 2009.

For more:
- see this release
- see this Reuters article
- see this Q4 earnings roundup

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