Sprint Nextel loses 1.3m customers and $1.6bn
Published: 20 February, 2009
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While Verizon Wireless was using Mobile World Congress to present itself as one of the world's most advanced cellcos, its US CDMA rival Sprint Nextel turned in another poor quarter, announcing it had lost 1.3m subscribers during Q4.
The cellco has been haemorrhaging customers for well over a year, and most worryingly, 1.1m of this quarter's defections were from the higher value postpaid segment. One of the key problems Sprint has faced in recent times, and which prompted its 2007 change of management, was the shift of its user profile towards lower ARPU prepaid users, and it has put many measures in place to try to stem the tide.
Illogically, CEO Dan Hesse said he was "pleased with the overall progress" made in improving the customer experience, and there were a few positive signs, though Sprint is pinning high hopes on a high profile launch of its Palm Pre exclusive this summer, and on using the huge underused capacity on its iDEN network (inherited from Nextel) to undercut its competitors aggressively on pricing.
Price wars can be dangerous though, and all four big cellcos are fighting to offer the most attractive flat rate plan. Sprint recently added new mobile broadband data options to its Simply Everything offer, and now T-Mobile USA, also fighting a slowing in its customer growth, is to promise an unlimited $50 call plan, that matches the plan from Sprint's Boost Mobile subsidiary, the main user of the iDEN network.
Other key metrics from Sprint's Q4 included a $1.6bn loss, down from $29.3bn the year earlier, though most of that was down to a $29bn writedown charge related to the acquisition of Nextel. Revenues were $8.4bn, down from $9.8bn year-on-year. The company does seem to be making some positive moves to increasing its smarpthone base, which should drive increased data revenues - smartphones now account for 30% of the carrier's device sales, and Qwerty devices are 41%, averaging $80 ARPU.
Sprint Nextel had 49.3m customers at the end of the quarter, down from 53.8m a year earlier, with churn steady at 2.16%. Boost's churn was 8.2%, also fairly stable. Wireless postpaid ARPU was down 4% to $56 and prepaid ARPU was $30, up from $28 in 2007.
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