Overland Park, Kan. — Sprint’s post-paid subscriber base will
continue to shrink this year, but at a slower rate than last year because
network and customer-service improvements are “mitigating the trend lines,” CEO
Dan Hesse said in announcing the company’s second-quarter
results. New handsets such as the Palm
Pre and BlackBerry
Tour worldphone, as well as other new phones to come later this year, are
also contributing to slower subscriber losses, he said.
The number of postpaid subscribers lost in the second quarter and
first half was up compared with the year-ago periods, but the postpaid
subscriber losses slowed sequentially from 1.25 million in the first quarter to
only 991,000 in the second quarter, said Hesse. He called the performance the “best”
sequential quarterly change in postpaid net subscriber losses since the first
quarter of 2007.
Sprint’s prepaid Boost service, on the other hand, enjoyed net
subscriber additions in the second quarter and first half, reversing year-ago
losses and helping reduce the carrier’s total subscriber losses compared with
year-ago periods. Much of the gain is attributable to the launch of a Boost
Unlimited program allowing unlimited talking, push-to-talk, texting and Web
browsing for $50/month. Further gains in the fast-growing prepaid market are
expected when the carrier closes its purchase
of prepaid MVNO Virgin Mobile USA in the fourth quarter or early next year.
Because prepaid gains didn’t offset postpaid subscriber
shrinkage, Sprint’s wireless operation posted declining operating revenues and
higher operating losses in the quarter and first half compared with the
year-ago periods.
Brand perception took a hit in 2006 and 2007 because of network
and customer-service issues, but “it takes time for perception to catch up with
reality,” Hesse said in explaining the carrier’s postpaid struggles. Businesses
reducing the number of cellphones they use also contributed to the continuing
subscriber-base decline this year, he added.
Over the past three years, Hesse noted, the company’s decline in
gross subscriber additions has been “fairly significant,” and he admitted that “there
is no quick fix.” But the carrier’s improved customer-case and network
performance, combined with new devices and “other programs” in the second half,
means “we’ll start to turn around postpaid performance around gradually,” he
said.
Other new devices that have helped include the Palm Pre and BlackBerry
Tour, which is RIM’s second world phone that operates in 3G mode in North
American CDMA 1x Rev. A networks and 3G mode in overseas 2.1GHz HSPA networks.
Sprint has begun to provide its indirect channels with a greater
supply of Palm Pre smartphones, he noted, and the carrier will broaden its
distribution of the BlackBerry Tour world phone “soon.” Sprint will offer the
Pre exclusively “into 2010.” Verizon Wireless has said it would offer the
device in early 2010.
In Sprint’s wireless operation, year-over-year net operating
revenues fell 9.5 percent to $7 billion for the quarter and 10.6 percent to $14
billion for the half. Second-quarter operating losses grew 19.9 percent
year-over-year to $314 million but fell sequentially by 43.7 percent from the
first quarter’s $558 million loss. First-half operating losses grew 13.3
percent to $872 million.
For the quarter, Sprint lost 991,000 postpaid subscribers, up
from a year-ago loss of 776,000 subscribers but down from the first quarter’s
loss of 1.25 million postpaid subscribers. For the half, the number of lost postpaid
subscribers hit 2.24 million, up from the year-ago 1.85 million. The postpaid
subscriber base at the end of the second quarter fell to 34.44 million from the
year-ago 38.9 million.
In prepaid subscribers, Sprint gained 777,000 subscribers, up
sequentially from the first quarter’s 674,000 and a reversal of a year-ago loss
of 138,000. For the half, net adds were 1.45 million compared with a year-ago
loss of 338,000 prepaid subscribers.
The carrier’s total subscriber base (prepaid and postpaid
combined) fell 257,000 in the second quarter compared with a 901,000 loss
during the year-ago quarter. The second-quarter loss was higher sequentially
from the first quarter’s 182,000. First-half subscriber-base shrinkage was
439,000, down from a year-ago loss of 1.99 million subscribers.
At the end of the second quarter, Sprint’s total subscriber base
was down to 48.83 million from a year-ago 51.86 million.
