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Sprint Wireless Posts Q1 Operating Income, Sub Growth

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

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

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.