Oct. 29 (Bloomberg) -- Sprint Nextel Corp., the third- largest U.S. wireless carrier, reported a wider net loss than analysts anticipated after paying more to subsidize phones.

The third-quarter loss expanded to 17 cents a share, the company said today. Analysts in a Bloomberg survey predicted 15 cents. The company lost a net 545,000 wireless customers last quarter, compared with the 290,000 estimate of Soleil/Nelson Alpha Research analyst Michael Nelson.

Sprint rivals AT&T Inc. and Verizon Wireless have lured consumers away with new versions of the iPhone and BlackBerry handsets, prompting the carrier to expand its own selection of so-called smart phones. Sprint paid $950 million to subsidize devices, 36 percent more than a year ago, to make them more affordable for customers.

“Sprint right now is in a difficult position of trying to balance growth with profitability,” said New York-based Nelson, who advises investors to hold the shares and doesn’t own them. “While they were able to improve their subscriber growth trends, it did come at a cost.”

Sprint lost 801,000 contract subscribers in the quarter, compared with Nelson’s prediction of 1 million. The carrier lost 410,000 wholesale and affiliate customers after companies that ran electronics with wireless capabilities on Sprint’s network deactivated those devices.

The loss grew to $478 million from $326 million, or 11 cents, a year earlier. Sales fell 8.8 percent to $8.04 billion. Analysts on average predicted $8.1 billion, according to the survey.

Stock Performance

Overland Park, Kansas-based Sprint fell 15 cents, or 4.6 percent, to $3.09 in New York Stock Exchange composite trading at 4 p.m. The shares have gained 69 percent this year.

Sprint reiterated that it expects subscriber losses to slow this year, compared with 2008. The carrier also expects to lose fewer customers in the fourth quarter than in the third.

Contract customers’ average monthly bills held at around $56 for the seventh straight quarter. Data revenue accounted for almost 30 percent of that.

Chief Executive Officer Dan Hesse is introducing Web- equipped smart phones to win extra revenue from customers who pay to access the Internet or download applications.

The company debuted Palm Inc.’s Pre in June and will offer the Palm Pixi next month. Sprint began selling the HTC Hero this month and plans to start selling another phone based on Google Inc.’s Android operating system in November.

To contact the reporters on this story: Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: October 29, 2009 16:04 EDT