Sprint Posts Wider Q2 Loss But Sees Signs of Growth
Sprint Nextel posted a $760 million Q2 loss, almost double the $384 million a year earlier. But it gained subscribers for the first quarter in three years. Sprint expects to keep adding customers the rest of the year, CEO Dan Hesse said Wednesday on a call with analysts. Sprint gained a net 111,000 subscribers, vs. a loss of 257,000 a year earlier, and ended the quarter with 48.2 million customers. It lost 228,000 contract subscribers, better than the 763,000 a year earlier. “Our improvements are foundational,” Hesse said. “You had a business that was in rapid decline. Now we got it to stable. Then the next phase will be growth.” He said he’s confident the company can add net subscribers in the second half.
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The Nextel side of the business is still suffering, Hesse acknowledged. The company added 136,000 postpaid customers on its core Sprint CDMA network, but its iDEN network lost some 364,000 postpaid customers. The story’s the same in prepaid: Nextel shed customers, Sprint gained them. Overall, the company added 173,000 net prepaid customers.
Sprint has no plans to switch to tiered pricing for wireless data, Hesse said. The company’s EVO customers use three times as much data service as Sprint’s other smartphone customers but already pay a $10 premium, he said. “What we're showing is customers will pay a premium for simplicity,” Hesse said. “Our bundled plans and simple plans are helping us” hold on to customers “and helping our brand, so we won’t make the decision lightly."
In general, Sprint’s turnaround has happened, said Credit Suisse analyst Jonathan Chaplin. He expects the carrier to return to growth this year. The company is going in the right direction but may not be able to improve its results as quickly over the next year because of wireless saturation, said Pacific Crest analyst Steve Clement. The slowdown in wireless postpaid also made Bernstein Research analyst Craig Moffett question the sustainability of Sprint’s turnaround. “The results paint a picture that holds up better on a cursory review of headlines than it does to sustained scrutiny of the details,” he said.