Sprint (NYSE:S) Oct. 26 said it added more than 1.3 million new wireless subscribers in the third quarter despite posting a net loss of $301 million, or 10 cents a share, on sales of $8.33 billion.
Financial analysts was expecting a loss of 22 cents a share on revenue of $8.38 billion.
Sprint, which also reported a $208 million boost in operating income, compared to a $213 million operating loss from a year ago, posted its best subscriber numbers in over 5 years.
The No. 3 U.S. carrier saw 304,000 postpaid users, 485,000 prepaid customers, along with 835,000 wholesale and affiliate subscribers. The subscriber gains came without the benefit of the iPhone 4S, which Sprint launched Oct. 14 and quickly topped the storied launch of Sprint's Android-based HTC Evo 4G smartphones from 2010.
There's no question the phone, which yielded Sprint's best-ever day of device sales in retail, Web and telesales, will buoy the company at a time when AT&T (NYSE:T) and Verizon Wireless have double the subscribers of Sprint, which ended Q3 with more than 53 million customers.
Indeed, Sprint CEO Dan Hesse showed a chart depicting postpaid additions as falling steadily from late 2005 until Q2 2009. "The brand had weakened enough that gross add dropped for 13 of 14 quarters," Hesse, adding that Sprint lost over 2 million postpaid gross additions per quarter.
Hesse left little doubt the availability of the iPhone 4S will bolster the company's turnaround going forward.
"The No. 1 reason users leave Sprint, or churn, is no iPhone, and we believe the No. 1 reason new customers don't try Sprint has been no iPhone," Hesse said on the earnings call this morning.
"Our early results of selling the iPhone 4 and iPhone 4S have confirmed the iPhone's ability to attract new customers. What one hopes to see from the device is a high percentage of gross adds, new customers and new revenue to Sprint."
Sprint certainly needs this, as it will cost the company $15.5 billion over the course of its four-year contract with Apple to sell the iPhone.
While he said two weeks in the market is not enough time to estimate gross add percentages, Hesse vowed to provide investors with a more cogent sales estimate after the fourth-quarter results are in. Over time, Hesse believes iPhone users are expected to be among Sprint's most-profitable customers.
Hesse also acknowledged a potential deal with Clearwire to help build out the company's LTE (Long Term Evolution) network. He added that the companies want to "begin negotiations of commercial terms under which Sprint may utilize and pay for access to the Clearwire LTE network."