Sprint Reports Strong Q2 Subscriber Gains

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Overland Park, Kan. - Sprint Nextel continued to post strong gains in the number of net new wireless subscribers in its fiscal second quarter.

This marks Sprint's third consecutive quarter of more than 1 million net additions and its fifth consecutive quarterly gain after three years of subscriber losses.

During the past four quarters, Sprint gained 4 million net new subscribers, expanding its subscriber base by 8.2 percent over the year ago to 52.1 million.

The carrier's wireless operations, however, dipped back into the red with an operating loss of $27 million compared with first-quarter operating income of $140 million. The first quarter marked the carrier's first quarterly operating income after 12 consecutive quarterly losses.

In releasing his company's wireless and wireline results, CEO Dan Hesse held out the prospect that wireless subscriber gains would continue, pointing in part to plans for "a stronger handset lineup" in the second half.

Devices, Hesse said, are "crucial" to acquiring and retaining subscribers, and he said their role in acquiring new subscribers has grown in recent years.

During the quarter, the company sold 1.47 million 4G phones and data devices, more than in any previous quarter, Hesse noted.

Continuing improvement in churn rates also bode well for future subscriber growth, he said. In the second quarter, Sprint posted its best-even quarterly churn rate of 1.75 percent in the quarter, down sequentially from 1.81 percent and the year-ago 1.85 percent.

Also helping expand the subscriber base is the company's continued advantage in offering only unlimited data plans, which don't throttle back data speeds when caps are reached, he said.

In detailing its subscriber gains, Sprint said the number of net new subscribers in the second quarter came to almost 1.1 million following a first-quarter gain of 1.12 million, which was its best showing of any quarter in five years.

As in the past, most of the gains came in the company's wholesale and retail prepaid segments and in retail postpaid Sprint-brand service, offsetting continued shrinkage in the number of retail postpaid subscribers using Sprint's low-data-rate iDEN network, which the company plans to shut down in the next few years.

In the quarter, the number of net new retail prepaid subscribers grew by 674,000, up from a year-ago 173,000. The number of net new subscribers gained through the wholesale and affiliate channels rose to 519,000 compared with a year-ago 166,000.

For its retail postpaid services, Sprint lost a net 101,000 subscribers because a net gain in CDMA-network subscribers of 226,000 failed to offset a loss of 327,000 net iDEN-network subscribers.

Other second-quarter financial data shows that wireless revenues, including equipment sales, grew 6 percent to $745, billion compared with the year-ago quarter and 5.7 percent in the half to $14.9 billion.

And first-half wireless operating profits hit $113 million compared with a year-ago loss of $61`7 million.

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