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Sprint Reports Strong Q2 Subscriber Gains

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.

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

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

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.