Sprint Posts $767M Loss, but iPhone Sales Adding Customers

 
 
By Michelle Maisto  |  Posted 2012-10-25
 
 
 

Sprint had a busy fiscal 2012 third quarter that included negotiating to sell 70 percent of its business to Japanese carrier Softbank for $20.1 billion, negotiating with Apple to offer its first iPads and keeping to the timetable of its Network Vision strategy, which includes rolling out Long Term Evolution (LTE) 4G technology, closing down its Nextel network and trying to convert those Nextel users into Sprint 4G customers.

On Oct. 25, Sprint announced during its third-quarter report that it had added 19,000 prepaid customers and 410,000 postpaid customers and brought in revenue of $7.3 billion but ultimately lost $767 million.

It also sold 1.5 million iPhones during the quarter, 40 percent of which went to new customers. (By contrast, AT&T announced the day before that it had sold 4.7 million iPhones during its third quarter, though only 18 percent had gone to new customers.) And even before the Sept. 21 launch of the iPhone 5, Sprint sold its 1 millionth LTE smartphone.

"The Sprint platform performed well, with strong net subscriber additions, record third-quarter postpaid and prepaid churn and robust revenue growth ... even as we continue to invest in Network Vision and position the company for future growth," CEO Dan Hesse said in a statement.

Sprint's LTE network is now live in 32 cities, though executives acknowledged that, while they have put intense pressure on partners to keep to schedule, there have been some timing setbacks, some due to storms. Still, while in September Sprint promised to bring LTE to 100 markets by the end of the year, in its Oct. 25 statement, it said it expects its LTE network to be in 115 new cities, in addition to the current 32, "in the coming months."

On Oct. 15 Sprint and Softbank announced the basic terms of their deal, but during the earnings call, executives declined to discuss the matter until it was further along.

Sprint Chief Financial Officer Joe Euteneuer noted, however, that Sprint had "this week" received $3.1 billion of the promised $20.1 billion from Softbank, "substantially improving our capital position."

Also regarding the deal and the money, Hesse acknowledged, "We will have much more flexibility to make sure our spectrum assets are what we need them to be," adding later, "But we're in a pretty good position today, regarding spectrum."

Sprint competitors Verizon Wireless and AT&T each reported third quarters that benefited from shared data plans they implemented this summer. Ralph de la Vega, AT&T's CEO of Mobility, said that customers were converting to the shared plans faster than expected, as well as signing up for larger data allotments than the carrier had first anticipated. Even 15 percent of subscribers with AT&T's no-longer-offered unlimited data plans had made the switch.

Tablets have been a partial driver to the shared plans, and in the coming weeks Sprint will offer its first iPads—the new iPad Mini and fourth-generation iPad, introduced by Apple Oct. 23—along with new tablet data plans.

When asked whether Sprint might increase the pricing on its unlimited plans, Hesse said he couldn't offer a definitive yes or no, though explained that it was a possibility if Sprint had a very strong LTE network in place. For the time being, however, as Sprint races to catch up to the far larger deployments of Verizon and AT&T, Hesse noted that it would be "risky, when we have a 4G network disadvantage."

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