Tweet
October 27, 2010, 7:58 AM EDT
By Greg Bensinger
(Updates with churn figures in ninth paragraph.)
Oct. 27 (Bloomberg) -- Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, reported a wider loss than analysts estimated as it spent more to subsidize customer upgrades to phones capable of working on its new network.
The third-quarter loss was 30 cents a share, the Overland Park, Kansas-based carrier said today in a statement. Analysts projected a loss of 28 cents, the average of estimates compiled by Bloomberg.
Sprint expanded the so-called fourth-generation network to 20 new markets in the quarter, bringing the total to 56, as it works to lure customers to lucrative two-year data contracts. The carrier takes on some of the cost of a new handset in exchange for the contract.
Sprint had ?elevated subsidy levels as part of the successful launches of the 4G-capable phones,? said Brett Feldman, an analyst Deutsche Bank AG. He rates Sprint ?buy.?
The net loss widened to $911 million from $478 million, or 17 cents, a year earlier. The results include a $365 million, or 12 cents per share, non-cash charge for an increased tax allowance, Sprint said.
Sales rose for the first time since the second quarter of 2007, to $8.15 billion from $8.04 billion. Analysts estimated $8.01 billion on average.
Sprint lost 107,000 contract subscribers in the quarter, compared with 801,000 a year earlier. The carrier added 471,000 customers without contracts, known as prepaid, down from growth of 666,000 a year earlier. Barclays Capital Inc. analyst James Ratcliffe predicted Sprint would lose 100,000 contract subscribers, known as postpaid, and add 225,000 prepaid users.
Churn Declines
Sprint fell 10 cents, or 2.1 percent, to $4.67 in early trading after closing yesterday at $4.77 on the New York Stock Exchange. The shares had added 30 percent this year before today.
The rate of churn fell to 1.93 percent from 2.17 percent among contract customers and to 5.32 percent from 6.65 percent for non-contract customers. AT&T Inc. and Verizon Wireless last week reported postpaid churn of 1.14 percent and 1.07 percent, respectively.
Verizon and AT&T said they added 584,000 and 745,000 contract subscribers last quarter, respectively. Postpaid customers are more valuable to carriers because they are locked in to two-year contracts.
Verizon Wireless, the largest mobile-phone carrier, will begin offering its own 4G service in nearly 40 markets by year- end, many of them sites already served by Sprint. AT&T has said it will offer the service by mid-2011.
(Sprint will hold a conference call at 8 a.m. New York time to discuss results. Go to LIVE to access the call.)
--Editors: Ville Heiskanen, Peter Elstrom
To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Powered by WizardRSS | Full Text RSS Feeds
(Updates with churn figures in ninth paragraph.)
Oct. 27 (Bloomberg) -- Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, reported a wider loss than analysts estimated as it spent more to subsidize customer upgrades to phones capable of working on its new network.
The third-quarter loss was 30 cents a share, the Overland Park, Kansas-based carrier said today in a statement. Analysts projected a loss of 28 cents, the average of estimates compiled by Bloomberg.
Sprint expanded the so-called fourth-generation network to 20 new markets in the quarter, bringing the total to 56, as it works to lure customers to lucrative two-year data contracts. The carrier takes on some of the cost of a new handset in exchange for the contract.
Sprint had ?elevated subsidy levels as part of the successful launches of the 4G-capable phones,? said Brett Feldman, an analyst Deutsche Bank AG. He rates Sprint ?buy.?
The net loss widened to $911 million from $478 million, or 17 cents, a year earlier. The results include a $365 million, or 12 cents per share, non-cash charge for an increased tax allowance, Sprint said.
Sales rose for the first time since the second quarter of 2007, to $8.15 billion from $8.04 billion. Analysts estimated $8.01 billion on average.
Sprint lost 107,000 contract subscribers in the quarter, compared with 801,000 a year earlier. The carrier added 471,000 customers without contracts, known as prepaid, down from growth of 666,000 a year earlier. Barclays Capital Inc. analyst James Ratcliffe predicted Sprint would lose 100,000 contract subscribers, known as postpaid, and add 225,000 prepaid users.
Churn Declines
Sprint fell 10 cents, or 2.1 percent, to $4.67 in early trading after closing yesterday at $4.77 on the New York Stock Exchange. The shares had added 30 percent this year before today.
The rate of churn fell to 1.93 percent from 2.17 percent among contract customers and to 5.32 percent from 6.65 percent for non-contract customers. AT&T Inc. and Verizon Wireless last week reported postpaid churn of 1.14 percent and 1.07 percent, respectively.
Verizon and AT&T said they added 584,000 and 745,000 contract subscribers last quarter, respectively. Postpaid customers are more valuable to carriers because they are locked in to two-year contracts.
Verizon Wireless, the largest mobile-phone carrier, will begin offering its own 4G service in nearly 40 markets by year- end, many of them sites already served by Sprint. AT&T has said it will offer the service by mid-2011.
(Sprint will hold a conference call at 8 a.m. New York time to discuss results. Go to LIVE to access the call.)
--Editors: Ville Heiskanen, Peter Elstrom
To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Powered by WizardRSS | Full Text RSS Feeds