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Sprint Posts Gains, Plans LTE Decision

Overland Park,
Kan. – Sprint gained more net new wireless subscribers in the fourth quarter of
2010 than it has since the first and second quarters of 2006 and continued to
reduce its wireless operating losses, the company announced.

For the quarter,
the company posted its third consecutive quarterly gain in net new wireless
subscribers following three years of declines.

On other topics
during an investors’ conference call, Sprint CEO Dan Hesse said he will likely
make an announcement before the middle of the year about whether the carrier
will switch to LTE technology for 4G data service in the future. The company
currently offers 4G WiMAX service that it wholesales from Clearwire, which is
majority owned but not controlled by Sprint.

Clearwire late
last year launched an aggressive round of cost reductions to conserve cash in
case it was unable to raise enough money to continue expanding its 4G network.
The company subsequently raised about $1.33 billion by issuing debt, but
analysts at the time said Clearwire needed to raise another $3 billion or more
of new funding to finish its network buildout.

Speaking to Sprint’s
potential to offer LTE, Hesse claimed Sprint has the spectrum capacity “to put
LTE on our spectrum,” although he said Sprint’s spectrum would not be able to
do so “for an infinite period of time.”

Hesse also noted
that as part of Sprint’s plan to consolidate its separate CDMA and iDEN cell
sites and phase out iDEN service beginning in a few years, Clearwire could add
its technology to the consolidated cell sites. That could bring “significant
economic benefits for both companies,” Hesse said.

In other comments,
Hesse said 69 percent of the devices sold in the fourth quarter for use on
Sprint’s CDMA  network were smartphones
and that at the end of the year, 50 percent of CDMA subscribers were using

Hesse also
explained the rationale for adding a new $10/month charge onto new 3G smartphone
service plans, all of which include unlimited-data use, rather than offer a
variety of plans that would include data-capped plans as well as unlimited-use
plans. The $10/month charge was previously imposed only on unlimited-data plans
of dual-mode 3G/4G phones.

Offering fewer,
simpler rate plans keeps costs down, particularly customer-care costs, he
explained. In addition, offering capped data plans run the risk of enticing
customers to step down to lower cost plans, he said.

In providing
details in its financial report, Sprint said its fourth-quarter gain of almost
1.1 million net new subscribers accounted for most of its full-year gain of 1.78
million, indicating subscriber-growth momentum in the quarter. The carrier’s
year-end subscriber base hit 49.9 million, up from the year-ago 48.1 million.

 The company also reported its best-ever
fourth-quarter and annual churn rates in its postpaid subscriber base at 1.86
percent and 1.95 percent, respectively.

The company’s
wireless segment continued to reduce its operating losses for the quarter and
year, with the fourth-quarter loss falling 58 percent year-over-year to $267
million and full-year losses shrinking 37 percent to $1.23 billion.

Although the
indicators are up substantially, the company is “not declaring mission
accomplished yet,” said Hesse, who came to Sprint three years ago to turn
around the company. Nonetheless, he noted that it has been almost five years
since Sprint added more than a million customers in a quarter.

The carrier also
posted its first quarter of retail (vs. wholesale) postpaid net additions since
the second quarter of 2007, he noted. Retail postpaid net adds for the combined
Sprint CDMA and Nextel iDEN networks were 58,000 for the quarter compared to a
year-ago loss of 107,000. Though the carrier lost 855,000 retail postpaid
subscribers for the full year, the losses were substantially lower than 2009’s
losses of 3.55 million.

bandwidth-constrained iDEN network lost 395,000 retail postpaid subs in the
quarter, while the carrier’s CDMA network gained 453,000 postpaid subs.

The carrier
enjoyed higher gains in its retail prepaid segment, with net adds rising to
646,000 from the year-ago 435,000 to mark the company’s highest ever
fourth-quarter gain in net new retail prepaid subscribers. That performance
helped bring full-year retail prepaid net adds to 1.64 million, down from
full-year 2009’s 2.55 million.