Sprint Posts Subscriber Gains, Widens Wireless Operating Loss

CEO Claure points up network improvements, highest ever retail gross adds
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Overland Park, Kan. — Sprint reversed three consecutive quarters of net losses in retail postpaid subscribers on the Sprint-platform network and posted a 42 percent gain in total Sprint-platform net adds to 967,000 in its fiscal third quarter ending December.

The Sprint-platform subscriber gain was the highest in 2.5 years, said CEO Marcello Claure.

But wireless operating losses swelled to $2.23 billion from a year-ago $595 million and from a second-quarter $110 million, though the company said that was due to a $1.9 billion impairment charge made largely to write down the value of the Sprint brand name. Without the charge, operating losses would have shrunk to $33 million.

Wireless operating revenues were down almost 1 percent to $8.43 billion compared to a year-ago $8.48 billion.

Most of the carrier’s net new Sprint-network subscribers came from prepaid and wholesale subscriptions. More lucrative postpaid net adds grew by only 30,000 in the quarter, down from a year-ago 58,000 but up from three preceding quarters of losses ranging from 181,000 to 272,000. Prepaid net adds rose to 410,000 from a year-ago 322,000, and wholesale net adds grew to 527,000 from a year-ago 212,000.

Total net adds, including subscribers acquired from U.S. Cellular in May 2013 and Clearwire in July 2013, came to 892,000, up from the year-ago 477,000.

Within that total, however, the company’s retail postpaid subscriber base fell by 19,000, though retail prepaid net adds hit 371,000 and wholesale net adds hit 540,000.

Churn, however, rose sequentially and year-over-year to 2.33 percent of retail postpaid subscribers and 3.97 percent for prepaid subs. Churn is higher than competitors’ rates, but Claure promised the rate would fall significantly in the current quarter.

Claure pointed to better churn rates and better times ahead because of continuing network-improvement gains that led to a 50 percent reduction in dropped calls year-over-year in the quarter. He also cited third-quarter retail postpaid gross adds that were the highest of any past quarter, and a 107 percent gain in Sprint-store traffic in December, thanks to aggressive promotions. Subscriber quality is also growing, he said.

Nonetheless, Claure said, “we acknowledge there is a long way to go to reach our goals, including lowering our postpaid churn rates to competitive levels. Our network performance continues to improve, and we are now focused on a strategy that will unlock the true potential of our spectrum assets.”

The carrier, for example, rolled out voice overs its former Nextel 800MHz spectrum for better in-building coverage. Seventy-five percent of the postpaid subscriber base has phones with 800MHz radios.

LTE coverage has expanded to 270 million people, and the carrier has already begun to build out its 800MHz network with 4G LTE. The company will also “densify” its network with more macro and small cells, he said.

The carrier also offers LTE via its 1.9GHz and 2.5GHz networks.

In other metrics, the company said device-financing options (Easy Pay and leasing) accounted to 46 percent of postpaid sales, up sequentially from 27 percent and up from a year-ago 7 percent.

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