Sprint Wireless Posts Q1 Operating Income, Sub Growth

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Overland Park, Kan. - Sprint Nextel's wireless operation posted the first quarterly operating income in the fiscal first quarter after 12 consecutive quarterly losses.

The performance is thanks in large part to  the carrier's best quarterly gain in net new subscribers in five years.

The quarter's gain of 1.12 million net new subscribers, following the fourth quarter's 1.1 million gain, marked the carrier's fourth consecutive gain in net new subscribers.

Most of Sprint's net subscriber gains, however, came in the less profitable prepaid segment, which posted 846,000 net new subs, marking the company's best-ever quarterly net gain in prepaid subscribers.

The gains came despite the launch of the Verizon iPhone, a price cut on the AT&T iPhone 3GS to $49, and Sprint's imposition of a monthly $10 fee on new subscriptions that include unlimited data, CEO Dan Hesse boasted.

With the subscriber gains, due in part to the company's best-ever postpaid churn rate of 1.81 percent, Sprint expanded its subscriber base to 51 million.

For the quarter, wireless operating revenues, including handset sales, rose 5.2 percent to $7.41 billion, with operating income hitting $140 million compared to a year-ago loss of $330 million.

Wireless service revenues, which exclude handset sales, were up 3 percent to $6.6 billion, largely resulting from increased average revenues from subscribers.

Although most of the carrier's subscriber gains came in the prepaid segment, it also netted 310,000 new postpaid subscribers. All of the postpaid gain, however, was due to a 389,000 gain in postpaid wholesale and affiliate subscribers, whose increases offset a 114,000 net drop in the number of "retail" subscribers who buy their service directly from Sprint.

Although the 114,000 drop is a marked improvement over the year-ago quarter's 578,000 loss, it is a setback from the fourth quarter of 2010, when Sprint netted 58,000 new retail postpaid subscribers, marking the carrier's first net postpaid additions since the second quarter of 2007.

For Sprint, the good news in the first-quarter decline in retail postpaid subscribers is that the number includes a gain of 310,000 Sprint-brand retail postpaid subscribers, offsetting a loss of 424,000 Nextel and Nextel PowerSource-brand retail subscribers. Sprint plans to phase out the 2G bandwidth-constrained Nextel network beginning in 2013.


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