Sprint Rides Evo Sales to Narrower Loss Than Forecast

Sprint Nextel Corp. reported a narrower loss than analysts estimated as demand for the Evo smartphone helped it gain wireless subscribers for the first time in three years.

The second-quarter loss was 15 cents a share, excluding some costs, the Overland Park, Kansas-based carrier said today in a statement. Analysts projected a loss of 17 cents, the average of 19 estimates compiled by Bloomberg.

Sprint started offering HTC Corp.’s Evo in June to compete with AT&T Inc.’s iPhone and Verizon Wireless’s Droid for the lucrative subscribers who sign up for monthly contracts. The device, the first so-called fourth-generation phone, sold out in many stores and helped Sprint gain a total of 111,000 customers.

“On the strength of its new 4G EVO phone, Sprint has continued to gain postpaid share,” said Todd Rethemeier, an analyst at Hudson Square Research Inc. in New York, who advises investors to buy the stock. “However, the biggest story this quarter was the churn improvement,” he said, referring to the rate at which customers leave.

The monthly churn declined to 1.85 percent for contract customers -- a record low -- from 2.05 percent a year ago. Churn for prepaid users fell to 5.61 percent from 6.38 percent.

The number of subscribers rose to 48.2 million from 48.1 million during the quarter. Sprint added 136,000 postpaid users for its primary wireless network and Chief Executive Officer Dan Hesse forecast subscriber growth during the rest of the year.

Sprint rose 1 cent to $4.84 at 4 p.m. on the New York Stock Exchange. The shares have added 32 percent this year.

Faster Speeds

The net loss widened to $760 million, or 25 cents a share, from $384 million, or 13 cents, a year earlier. The company had costs of 10 cents a share related to deferred tax assets. Sales fell 1.4 percent to $8.03 billion from $8.14 billion. Analysts estimated $8.03 billion on average.

The third-largest U.S. mobile-phone carrier was first to roll out a 4G network, which boasts higher data speeds, and has seen shortages of the $199 Evo, the first phone to run on the network. Verizon Wireless plans to start 4G service this year and AT&T in 2011.

Hesse said on a conference call Sprint is working to get more Evos from Taoyuan, Taiwan-based HTC to help meet demand.

“We wish we could get more devices,” he said.

Saturating Market

Carriers are trying to get customers to spend more on wireless Web browsing and other data-intensive activities as the market for new contract subscribers dries up. There are enough mobile devices for more than nine out of every 10 people in the U.S., according to the CTIA industry association.

AT&T, the exclusive carrier for Apple Inc.’s iPhone in the U.S., gained 496,000 contract subscribers last quarter. Verizon Wireless, co-owned by Verizon Communications Inc. and Vodafone Group Plc, added 665,000 such users. Verizon Wireless will introduce the iPhone on its network next year, two people familiar with the plans said last month, potentially ramping up pressure on Sprint.

Hesse has said the carrier has no plans to change its unlimited data pricing after AT&T switched to a tiered plan and Verizon Wireless has said it expects to follow suit.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

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