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.
“Our 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. “During 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. “Customer 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.
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