Sprint Narrows Losses, Loses Fewer Customers

Pre-paid customers gained from the acquisition of Boost Mobile and Virgin Mobile USA allows Sprint Nextel to cut its chronic customer loss problem.

Sprint Nextel managed to staunch its chronic subscriber loss problem in the fourth quarter, reporting Feb. 10 that it lost a net 148,000 subscribers during the last three months of 2009, a substantial improvement over the 545,000 who dropped Sprint in the third quarter.

Much of the improvement can be attributed Sprint's focus on pre-paid customers. Through its acquisition of Boost Mobile and Virgin Mobile USA, Sprint added 435,000 pre-paid customers during the quarter.
Sprint also narrowed its losses to $980 million, or 34 cents per share, in the fourth quarter, compared to a loss of $1.6 billion (57 cents per share) from a year earlier.
"We continue to closely manage costs, and in 2009 we generated the highest annual free cash flow since the merger," said Dan Hesse, Sprint Nextel CEO. "The fourth quarter completion of the Virgin Mobile USA, Inc. and iPCS, Inc., acquisitions, as well as our additional large investment in Clearwire, are important to our future."
Clearwire and Sprint Nextel are the only two U.S. carriers betting on WiMax to deliver 4G wireless broadband. Verizon Wireless and AT&T, the nation's two largest carriers, are betting on a rival technology called LTE for their 4G networks. Both WiMax and LTE allow for the delivery of last-mile wireless broadband access, promising faster download speeds than current cellular networks.
Sprint Nextel opened the original U.S. WiMax market in Baltimore last year. Following a merger that saw Sprint turn over its entire 2.5GHz spectrum holdings and its WiMax-related assets, including its Xohm division, to Clearwire.
The company plans to invest another $1 billion into Clearwire's WiMax 4G technology with Comcast, Intel, Time Warner and Bright House Networks contributing another combined $500 million.
Sprint 4G is currently available in 27 markets. By the end of 2010, Sprint/Clearwire plans to add many more U.S. markets, including Houston, Boston, Washington, D.C., New York and San Francisco.