Customers avoid Sprint in 1Q as suitors circle
Apr. 24, 2013
NEW YORK (AP) — The flow of new customers to Sprint stopped in the latest quarter, the company reported Wednesday as it weighed the offers of two corporate suitors.
Sprint Nextel Corp., the country's third-largest cellphone carrier, said it added a net of just 12,000 customers to its Sprint brand in the quarter, and it would have lost 252,000 if it wasn't for Nextel customers moving over now that their network is being shut down.
The number of new Sprint customers was the lowest for any quarter since 2009, and suggests that CEO Dan Hesse's carefully engineered turnaround of the company is on shaky ground. There are just 1 million Nextel customers left, raising the question of what Sprint's subscriber trends will look like when they're gone.
Sprint executives acknowledged that they are losing some customers because the company is behind the other three nationwide carriers when it comes to data download speeds. It's building a high-speed "LTE" network, but in the meantime, most customers are stuck on a slow "3G" network.
AT&T Inc., the second-largest phone company, posted weak subscriber numbers on Tuesday. Verizon Wireless, the industry titan, saw strong trends, as did underdog T-Mobile USA, possibly because it just started selling the iPhone.
Overland Park, Kan.-based Sprint ended March with 55.2 million devices on its network, of which 31.3 million were on contract-based plans, which are the most lucrative.
In the short term, having fewer new customers helps a phone company's bottom line, since it doesn't have to pay out as much in phone subsidies. Phone companies pay hundreds of dollars in subsidies to put new phones in customer hands for $199 or less.
Sprint, which has posted a net loss in every quarter for the last six years, narrowed its first-quarter net loss to $643 million, or 21 cents per share. A year ago, it lost $863 million, or 29 cents per share.
Revenue edged up 0.7 percent to $8.79 billion.
Both figures beat analyst estimates. According to FactSet's survey, Wall Street expected Sprint to report a loss of 32 cents per share on revenue of $8.73 billion.
Sprint shares rose 2 cents to $7.12 in morning trading, suggesting that investors don't believe the latest quarterly results will change the strategies of its suitors.
Sprint has agreed to sell 70 percent of itself to Japan's Softbank Corp. for $20.1 billion, but last week got a competing $25.5 billion offer from Dish Network Corp. for the whole company.
A special committee of Sprint's directors is considering Dish's proposal. Hesse didn't comment further on a conference call with analysts, but said the company still assumes that it will close three deals by July 1: the sale of a stake to Softbank, the buyout of minority shareholders in network operator Clearwire Corp., and the acquisition of some Midwestern service areas from U.S. Cellular Corp.