The HTC Evo 4G, despite being in short supply, helped Sprint achieve its best-ever churn rate during its fiscal second quarter - during which it saw $8 billion in revenue but a $760 million net loss.
The HTC Evo 4G smartphone was in many
ways a blessing for Sprint during its second quarter, proving to be a very
popular device and mitigating the impact of Apple's release of the iPhone 4
during the same period.
However, that popularity, along with market factors, has led to a shortage
of HTC Evo 4Gs since soon after the device's
June 4 launch. It's a situation that Sprint is working hard to correct,
according to CEO Dan Hesse.
Peter Chou has heard from me probably more often than he'd like to," Hesse
said, explaining that there's currently a worldwide shortage of parts,
particularly of chips and displays.
"What happened in the 2008-early 2009 timeframe is a lot of the
capacity came offline, as the economy began to go down. And now, with a
combination of the economy improving and all of a sudden some real increased
customer demand for these high-end devices, it's putting some strain on the
supply chain. We are working with our suppliers very closely, HTC
in particular, trying to get as much inventory as we can. ... We could definitely
sell more [Evo 4G handsets] if we could get more."
Hesse's comments came during a conference call July
28 with journalists and analysts to announce Sprint's financial numbers from
the second quarter. Overall, Sprint presented another glass-half-full quarter.
The country's third-largest carrier announced second-quarter revenues of about
$8 billion and a net loss of $760 million-which was down from first-quarter
losses of $865 million on revenues of $8.1 billion.
With thanks to the Evo 4G and RIM BlackBerry Curve, as well as its best-ever
postpaid churn rate of 1.85 percent, Sprint saw a net postpaid subscriber
growth of 136,000 on its CDMA network and 285,000 for "the Sprint brand."
During the call, Hesse also acknowledged the launch
of the Apple iPhone 4, which became one of the largest news items during the
"I would not be perfectly honest with you if I didn't say that each
time Apple announces a new phone, there's an impact on the market-that we don't
all feel it," he said. "But what we've done over the last few years
is mitigate the size of that impact ... by having our own plan. The Samsung
Instinct helped us in '08, the [Palm] Pre helped us in '09, and the Evo will
help us this year to mitigate that impact."
Somewhat undoing Sprint's plan, however, has been its shortage of the Evo
4G. With its iPhone-mitigating HTC handset,
Sprint has also felt the thorns on the rose, as AT&T has in its efforts to
support its iPhone users. Evo 4G customers, said Hesse,
are using "three and a half times more data" than Sprint's other
smartphone customers. While the demands of AT&T's highest data users
encouraged it to move from its former all-you-can-eat service plans to tiered
pricing, Hesse said Sprint isn't there yet.
"Customers will pay a premium for simplicity," he said. "Our
bundled plans and our simple plans are helping us with churn, are helping our
brand, so we won't take the decision lightly to move away from our current
structure to something around tiering. I'm not excluding it as a future
possibility, but we see no need currently to move in that direction."
He added that, with the Clearwire network-which supplies 4G service to the
Evo 4G, and soon the Samsung Epic 4G, which will be its second 4G-enabled
handset-Sprint is additionally at an advantage. "It's less expensive, from
a technical point of view, with our spectrum position at Clearwire ... to
produce gigabytes on 4G networks than 3G networks," Hesse
During the quarter, Sprint, via Clearwire, launched eight new 4G markets,
bringing its current total to 43 markets reaching 51 million people. Its goal
for the end of 2010 is to cover 120 million people in marketing, including Boston,
New York, San
Francisco and Washington,
During the quarter, Sprint announced that it served 48.2 million customers-a
tally of its 33.2 million postpaid subscribers, 11.2 million prepaid
subscribers, and 3.7 million wholesale and affiliate subscribers.
On July 22, competitor AT&T
announced second-quarter consolidated revenue of $30.8 billion
, net income
of $4 billion and a total customer base of 90.1 million subscribers. A day
Wireless, the nation's largest carrier, with 92.1 million subscribers,
announced second-quarter revenue of $26.8 billion,
though a loss of $198
million, due to what it described as a number of one-time issues.