The past year has been tough on Sprint Nextel and Q3 2008 financial results shows signs that times might be worse before they start getting better. The carrier posted a Net Loss of $326 Million in Q3 2008 anda year-to-date Net Loss of 1.175 Billion. With 3.5 million subscribers leaving Sprint between September 2007 to September 2008, the carrier will need all of their remaining 50.5 million subscribers to continue to have faith in the recovery being orchestrated by CEO, Dan Hesse.
Despite poor performance, Sprint has made serious steps in re-inventing their presence in the wireless industry. To start they revamped their support staff and as a result were recently awarded top honors for customer service. Sprint also became the first US carrier to launch HTC Touch Pro and Touch Diamond and in a short time they will add the BlackBerry Curve 8350i for their Nextel subscribers. The big question is what will it take device wise to bring customers in droves to join the ‘Ready Now’ network?
Wireless Customers
- The company served 50.5 million customers at the end of the period, compared to 54.0 million at the end of the third quarter of 2007. The credit mix of acquisitions has improved for four consecutive quarters, and prime customers represent almost 83% of the post-paid base.
- For the quarter, total wireless customers declined by a net 1.3 million including losses of 1.1 million post-paid customers and 329,000 prepaid users, which was slightly offset by a 130,000 increase in the number of wholesale and affiliate subscribers.
- At the end of the third quarter, the company served 37.8 million post-paid subscribers, 3.9 million prepaid subscribers and 8.8 million wholesale and affiliate subscribers.
- Subscribers by network platform include 35.4 million on CDMA, 13.5 million on iDEN and 1.6 million Power Source users who utilize both networks.
- More than 9% of post-paid customers upgraded their handsets during the third quarter, resulting in increased contract renewals.
- In the third quarter, the company launched Ready Now as part of an ongoing plan to familiarize customers with their handsets and service while encouraging data adoption. The company added to its device and service capabilities with the launch of the Palm(R) Treo(TM) 800w, Katana Eclipse by Sanyo, Motorola Renegade(TM) V950, M320 and M220 by Samsung, the nationwide introduction of Sprint AIRAVE(TM) by Samsung, and Touch Diamond(TM) by HTC.
- In the fourth quarter, the device lineup is expanding further to include the award-winning Samsung Rant, Samsung Highnote and LG Lotus(TM) featuring the easy-to-use One Click interactive user interface, HTC Touch Pro, and Motorola i576. Additionally, the company will launch the BlackBerry(R) Curve(TM) 8350i – the newest Nextel Direct Connect-capable BlackBerry smartphone. In 2009, Sprint plans to launch a total of eight new Nextel Direct Connect handsets as part of its new device portfolio, with five launching during the first half of the year.
Wireless Churn
- Wireless service revenues for the quarter of $6.8 billion declined 13% year-over-year and 3% sequentially. The year-over-year decline was due to fewer subscribers and lower ARPU, while the sequential decline was due primarily to fewer wireless subscribers. Wholesale, affiliate, and other revenues were down sequentially and compared to the year-ago period due to pricing pressures.
- Wireless post-paid ARPU in the quarter was stable at $56 compared to the first and second quarters of 2008, as growth in data substantially offset voice declines. Wireless post-paid ARPU declined by nearly 6% compared to the year-ago period, reflecting continued pressure on voice MRC and overage revenues, partially offset by data revenue growth.
- Data revenues contributed approximately $13.50 to overall post-paid ARPU in the third quarter, led by growth in CDMA data ARPU. CDMA data ARPU increased more than $1 from second quarter, to about $16.50, now representing almost 29% of total CDMA ARPU. The increase was driven by strong take rates on bundled data services, such as those included with Simply Everything(TM), as well as continued growth in data cards.
- Prepaid ARPU in the quarter was approximately $31 compared to $30 in the year-ago period and in the second quarter of 2008. The sequential and year-over-year increase reflects a growing contribution from Boost Unlimited subscribers, offset by lower ARPU of traditional prepaid users.