Sprint Adds 967K Customers Overall, Net Revenue Down in Fiscal Q3

The nation's third-largest mobile carrier also saw its Q3 net loss more than double to $2.4 billion, up from a net loss of $1.04 for the same period one year ago.

Sprint, earnings, mobile

Sprint added some 967,000 new wireless customers in the third quarter of 2014, but the company's net operating revenue was down by 1.8 percent and its net loss more than doubled from the same quarter one year ago.

In a Feb. 5 announcement, Sprint also reported that it logged 30,000 postpaid net additions to its mobile customer base for the quarter, while it saw its postpaid churn rate increase from 2.07 percent a year ago to 2.3 percent.

Sprint's net operating revenue for the quarter was $8.97 billion, down 1.8 percent from the $9.14 billion that was received for the same quarter one year ago, while its net loss came in at $2.4 billion, which was more than twice the loss of $1.04 billion one year ago.

The company's operating loss of $2.54 billion includes non-cash charges of $2.1 billion, according to the company. The Q3 operating loss compared with an operating loss of $576 million for the same quarter one year ago, and includes a $1.9 billion reduction to the Sprint trade name and approximately $200 million to reduce the carrying value of wireline network assets. Without those write-downs, Sprint's operating loss would have improved $169 million year-over-year, the company stated.

"We are pleased with the growth in sales in the quarter and the improving quality of our customer base as we begin our turnaround plan," Sprint CEO Marcelo Claure said in a statement. "However, we acknowledge there is a long way to go to reach our goals, including lowering our postpaid churn rates to competitive levels. Our network performance continues to improve, and we are now focused on a strategy that will unlock the true potential of our spectrum assets. I am confident that we have the right plan in place to be successful."

Sprint has apparently been adding new customers due to continuing efforts it has made in the mobile marketplace, including its December 2014 "Cut Your Bill in Half" promotion, which cut the mobile bills of existing Verizon or AT&T customers if they moved their service over to Sprint's network.

Eric Costa, an analyst with research firm Technology Business Research (TBR), told eWEEK in an email that Sprint's revenue declines will likely continue through the first half of 2015.

"Sprint remains in rebuild mode entering 2015, with a focus on turning around its postpaid subscriber growth to help improve wireless revenue and margin growth," wrote Costa. "The operator showed signs of progress in 4Q14 with improved subscriber retention and strong prepaid growth. However, Sprint continued to trail far behind the Tier 1 competition in terms of postpaid net additions."

One problem the company could have in 2015 is that its Cut Your Bill in Half promotion may not bring in the customers and revenue that Sprint needs, wrote Costa. "TBR believes the promotion will be more successful retaining subscribers and attracting lower-end customers using inexpensive devices, yet will be less effective in drawing in higher end-customers, such as iPhone users. Total savings for higher-end customers may be minimal as they will need to purchase an expensive unsubsidized handset which may potentially offset the discount on their service plans."

In early August 2014, Sprint dropped its plans to buy T-Mobile after the move was opposed by regulators, according to reports at the time. Sprint had been rumored for months to be seeking a merger with T-Mobile so that the two struggling companies could join together and fight harder to compete with mobile powers Verizon Wireless and AT&T. Neither company ever commented publicly on those rumors until Sprint finally said in August that it was giving up its plans. Following the aborted merger attempt, Sprint then shook up its executive ranks by replacing its CEO, Dan Hesse, with Marcelo Claure, the founder and CEO of Brightstar, a subsidiary of Softbank, Sprint's parent company.

Since August, the big four carriers—Sprint and its three major U.S. competitors, AT&T, T-Mobile and Verizon—have been continuing to pummel each other over prices, data packages and other features in the war for more customers and revenue.

In November 2014, Sprint announced disappointing financial results for the second fiscal quarter of 2014, having lost $192 million on consolidated net operating revenue of $8.5 billion, according to an earlier eWEEK report. Sprint lost some 272,000 postpaid customers in Q2 and announced that another 2,000 employees would lose their jobs as the company tried to save money and turn its financial performance around.