Sprint Nextel subscribers flee; earnings fall
Sprint Nextel lost subscribers and struggled to compete with mobile industry juggernaut Verizon Wireless in the third quarter earnings period. Unlike Verizon and AT&T, Sprint Nextel failed to see a boost from the new iPhone 5.
Subscriber trends are turning south again for¬†Sprint¬†Nextel¬†as it struggles to compete with Verizon Wireless, the juggernaut of the industry.
The country's No. 3 wireless carrier on Thursday said it lost overall subscribers for the first time in two and a half years in the third quarter, as customers gave up on the moribund¬†Nextel¬†network and the company failed to sign up enough of them on the¬†Sprintnetwork.
It's the first time¬†Sprint¬†Nextel¬†Corp.'s is reporting quarterly results since agreeing to sell 70 percent of itself to Japanese cellphone company Softbank Corp. for $20.1 billion. The deal hasn't closed yet, but¬†Sprint¬†has already borrowed money from Softbank.
Sprint¬†lost an overall 423,000 subscribers in the July to September period, as trends across its product lineup were weak.
Excluding recaptured¬†Nextel¬†customers, it lost contract-signing subscribers from the¬†Sprint¬†network for the first time in years. Customers on contract-based plans are the most lucrative, and keeping them has been a linchpin of CEO Dan Hesse's turnaround plan.
For non-contract plans, the Overland Park, Kan., company added just 19,000 customers, the smallest number in more than three years.
Sprint's¬†report follows a blow-out performance by Verizon Wireless, the country's largest carrier, which added 1.8 million overall subscribers, and a more lackluster report from No. 2 AT&T Inc., which added 228,000 (both figures exclude devices connected through wholesale agreements).
All three carriers started selling the iPhone 5 in the quarter, but while the bigger two saw a jump in iPhone activations,¬†Sprint¬†did not. It activated 1.5 million iPhones in the quarter, flat with previous quarters.
Sprint¬†bought the¬†Nextel¬†network in 2005, and it's been a major reason for¬†Sprint's¬†consistent quarterly losses for the last five years.¬†Nextel¬†phones are known for their push-to-talk capability, but the network doesn't support the kind of data rates that smartphones require, and it's not compatible with the¬†Sprint¬†network.¬†Sprint¬†is shutting it down next year.
Sprint's¬†loss was $767 million, or 26 cents per share, for the July-September quarter, from a loss of $301 million, or 10 cents per share, a year ago.
Revenue rose 5 percent to $8.76 billion.
Analysts polled by FactSet expected a loss of 43 cents per share on $8.81 billion in revenue for the Overland Park, Kan., company.
Sprint¬†shares rose 4 cents to $5.66 in premarket trading.