Sprint, Burdened By iPhone, Tries to Turn a Corner

 
 
By Michelle Maisto  |  Posted 2012-02-08 Print this article Print
 
 
 
 
 
 
 

Sprint reported a fourth-quarter loss, but also the end to a four-year period of recovery. The next few years will instead be about growth—and of course the iPhone and LTE.

Sprint, during its first full quarter with the Apple iPhone, reported a net loss of $1.3 billion and a diluted loss of 43 cents per share during the fourth quarter of 2011. This was the bad news.

The good news was that Sprint, which announced its fourth-quarter earnings Feb. 8, sold 1.8 million iPhones€”though UBS analysts predicted 1.9 million€”and 40 percent of these went to new customers.

Other good news for the nation's third-largest carrier:

€¢ It added 1.6 million subscribers during the quarter, its best on that front since 2005.

€¢ Helped by the iPhone, its average revenue per user, known as ARPU, rose more than 7 percent year-over-year; the largest quarterly increase in the history of the industry.

€¢ 2011 brought Sprint's lowest annual churn in its history.

€¢ Prepaid subscribers grew 20 percent year-over-year to nearly 14.8 million subscribers.

€¢ Sprint's Network Vision plan is on schedule and on budget, and Sprint announced that Kansas City and Baltimore will join Houston, Dallas and San Antonio, Texas, as well as Atlanta as the first cities to have access to the 4G Long-Term Evolution (LTE) network it will turn on in mid-2012.

€œOur strong fourth-quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience,€ Sprint CEO Dan Hesse said in a statement. €œDuring the past year, Sprint added more than 5 million net new customers and grew wireless service revenue by more than 5 percent, including 17 percent for the Sprint platform. This momentum gives us confidence as we execute our Network Vision upgrade and 4G LTE rollout.€

The message to media and analysts during the company€™s earnings call was one of forward momentum. The end of 2011 marked Hesse's four-year anniversary with the company and the end to a first recovery phase for the business. The second phase, kicked off with 2012, is one of growth.

"The last four years have been years of recovery, put in place to support our next few years of investment," said Steve Elfman, Sprint's president of network operations. "We have effectively turned our core business around."

Hesse reinforced the theme.

"We've come a long way in four years," he said. €œCustomer experience has gone from the worst to arguably the best in the industry... and we have a vibrant, growing Sprint platform that will fuel our ongoing growth."

During the question-and-answer portion of the call, Hesse was asked how Verizon Wireless' deal with cable companies including Comcast will affect Sprint and the options available to it, and he acknowledged, "There's no question ... we won't have as many options as we normally would," and executives will definitely consider "partnering opportunities."

Hesse added: "AT&T's decision to abandon the T-Mobile deal also creates many more opportunities for us and other non-top-two carriers to become more competitive over time. We'll look at all the opportunities [available to us] over time."

Sprint is currently waiting for LightSquared to receive Federal Communications Commission approval of its proposed 4G LTE network. In the meantime, Sprint will continue to rely heavily on its 4G WiMax partner, Clearwire. Penned in December, Sprint's deal with Cleawire€”potentially worth up to $1.6 billion over four years€”includes Sprint paying Clearwire $926 million, two-thirds of it in 2012, in exchange for unlimited 4G service in 2012 and 2013.

As the only major carrier to still pair unlimited data with its smartphones€”particularly its iPhones€”Sprint's unlimited deal with Clearwire is "very helpful in that regard," said Hesse. He added that in 2013 Sprint will begin to introduce LTE devices that will work on Clearwire's new LTE network.

Regarding fourth-quarter sales that weren't up to AT&T's and Verizon's, Hesse noted that holiday sale prices and discounts, while expected, were to an uncommon degree, with prices far lower than normally seen.

"We just decided that we weren't going to go there,€ said Hesse.

 


 
 
 
 
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
 
 
 
 
 
 
 

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