Sprint Loses Fewer Subs, Plans New Prepaid Strategy

By Joseph Palenchar -- TWICE, 2/22/2010

OVERLAND PARK, KAN. — Sprint lost fewer wireless subscribers in the fourth quarter and fi scal year ending Dec. 31 and reduced its year-over-year wireless operating losses for the periods, the company announced.

The company, however, didn’t predict when it would return to wireless profitability, nor did it offer a 2010 target for subscriber growth or churn reduction. In 2010, however, the company “expects continued significant improvement in the downward trend in revenue … seen in the past few years,” said chief financial officer Robert Brust during an investor conference call.

One of the methods to achieve that goal will be a new prepaid strategy that, by the end of the second quarter, will provide “a robust revamped portfolio of brands,” each targeting different segments of the population with “unique value propositions,” said Dan Schulman, prepaid group president. Each brand will appeal to people with unique needs and to people who shop in different channels, he said. By segmenting the prepaid market, Sprint will be able to compete “without pulling the price lever” in each segment, he continued. Growing prepaid price competition slowed the company’s growth in net prepaid subscriber additions in the fourth quarter compared to the first three quarters, the company noted.

Sprint’s new prepaid strategy will be “fully rolled out by the end of the second quarter,” Schulman said. The U.S. prepaid market has grown to about 55 million to 60 million subscribers industrywide, thus supporting a segmentation strategy, he said. In prepaid, Sprint’s current brands include Boost Mobile and Virgin Mobile, which it acquired last year.

In other comments, CEO Dan Hesse noted that 49 percent of Sprint CDMA handsets sold in the fourth quarter were either smartphones or touchscreen phones. The models included the company’s first Android-based smartphones.

Hesse also said the carrier has made a lot of progress in upgrading existing customers’ perceptions about the Sprint brand, but he noted that it has made fewer strides changing the perceptions of non-customers.

He also said he wished the carrier made more progress in reducing churn in 2009 and plans to do better in 2010, but he didn’t offer a churn target. The company, nonetheless, lost fewer net subscribers in the quarter and full year on a year-over-year basis.

For the quarter, the company lost 148,000 net subscribers compared to a third-quarter 545,000 reduction and yearago 1.27 million reduction. For the full year, Sprint lost 1.13 million subscribers compared to a year-ago loss of 4.58 million subscribers. The company’s yearend subscriber base came to 48.1 million, down from a year-ago 49.3 million.

Wireless posted a fourth-quarter operating loss of $635 million, up sequentially from the third quarter’s $448 million loss but down signifi cantly from a year-ago fourth-quarter loss of $1.82 billion. The full-year operating loss fell to $1.96 billion compared to the previous year’s $2.81 billion operating loss.