Sprint Loss Narrows as Contract Users Increase for First Time Since 2007
Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, reported a narrower loss after gaining two-year contract customers for the first time in 13 quarters.
The fourth-quarter loss narrowed to $929 million, or 31 cents a share, from $980 million, or 34 cents, a year earlier, the Overland Park, Kansas-based carrier said in a statement today. Sales rose 5.5 percent, exceeding analysts’ estimates.
Sprint expanded its so-called fourth-generation network, which offers faster data speeds, to new markets through partner Clearwire Corp. to help lure users from Verizon Wireless and AT&T Inc. Sprint, whose handsets include the touch-screen Evo from HTC Corp., added 58,000 contract customers last quarter.
“The fact that Sprint was able to add almost 60,000 postpay subscribers shows that Sprint is becoming more relevant in the mind of the consumer,” Jennifer Fritzsche, a Wells Fargo & Co. analyst, said in a note today. She rates Sprint shares “outperform” and projected 2,000 new contract customers.
Jonathan Atkin, a RBC Capital Markets analyst in San Francisco, estimated Sprint would add 120,000 new contract customers and Michael Nelson, a Mizuho Securities USA Inc. analyst in New York, predicted 25,000. Sprint said today it expects to end the year with more contract users than in 2010.
Sprint rose 25 cents, or 5.8 percent, to $4.60 at 4 p.m. in New York Stock Exchange composite trading. The shares have added 8.7 percent this year.
AT&T and Verizon Wireless are rolling out competing 4G networks. The carriers reported 400,000 and 872,000 new contract customers last quarter, respectively.
Sprint will likely maintain its earnings performance this year, compared with 2010, Chief Financial Officer Bob Brust said on a conference call. “We should see improvements starting in 2012” to earnings, he said.
Sprint faces added pressure from Verizon Wireless, co-owned by Verizon Communications Inc. and Vodafone Group Plc, as that carrier began sales of the Apple Inc. iPhone today in stores. AT&T, which had a monopoly in the U.S. for the iPhone since 2007, will also keep offering the device.
“We are doing what we can to make sure that our customers stay with us and continue to have attractive offers,” Chief Executive Officer Dan Hesse said on the conference call. “With respect to Verizon, obviously our customers not only have a strong device lineup, but they get a lot of value.”
Sprint reported 646,000 new non-contract customers, which include its Boost Mobile and Virgin Mobile USA brands. That compares with the 471,000 estimate by Fritzsche.
The carrier also reduced the rate at which customers leave. Churn among contract customers dropped to 1.86 percent from 1.93 percent in the third quarter, and prepaid churn fell to 4.93 percent from 5.32 percent.
Sales rose to $8.3 billion from $7.87 billion. Analysts predicted revenue of $8.16 billion and a loss of 30 cents a share, the average of estimates compiled by Bloomberg.
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