Sprint Posts $151M Q1 Loss, but Says It's Making Progress

Sprint says its network rip-and-replace efforts drove away customers in Q1, but Spark, LTE and Framily plans may help bring them back.


Sprint's message continues to be: We're getting there.

The carrier, the first of its peers to offer 4G services, albeit via WiMax technology, has been racing to dismantle the old Nextel and 3G networks and roll out Long Term Evolution (LTE), as well as Sprint Spark, which uses a combination of network and on-device technologies to deliver wireless speeds that Sprint says surpasses the speeds of any U.S. carrier today and will be three times as fast by 2015. By midyear, Sprint plans to have LTE available to 250 million people, and over the next three years, it plans to have Spark in 100 major cities.

During the first quarter of this year, however, its construction dust continued to drive away customers. It lost 231,000 postpaid subscribers during the quarter, related to disruptions from the network overhaul, it said, and 364,000 Sprint platform prepaid customers, primarily due to "changes in the Lifeline program recertification process that affected the Assurance Wireless subscriber base."

"Churn should come down as we complete the voice network build-out," Sprint CEO Dan Hesse said during the April 29 call, adding that he's "confident" Sprint is building a solid foundation that customers will come back to.

In areas where the network build-out is complete, results have been "encouraging," he added.

That wasn't the only good news.

While Sprint posted a loss of $151 million, this was a 77 percent improvement from its first quarter a year ago. (During the fourth quarter of 2013, it posted a loss of $576 million.)

Sprint's earnings before interest, taxes, depreciation and amortization rose by $300 million to $1.84 billion—a 22 percent increase from a year ago.

In January, Sprint introduced Framily plans—plans that let users make "family" of anybody and incentivize friends going in together by knocking down each person's bill by $5, for each additional person who joins in. Plans can go as low as $25 a month for 1GB when seven subscribers are in the "framily."

"Framily plans quickly became the fastest-growing rate plans in Sprint history," said Hesse.

While the plans were only available in Sprint-branded stores during the quarter, 3 million customers are now on Framily plans, and Sprint plans to expand the programs' availability to other distribution channels.

Sprint sold nearly 5 million smartphones during the quarter, bringing the percentage of Sprint subscribers on smartphones to 84 percent.

"With the expected midyear completion of the rip-and-replacement of our core 3G and voice network, and the ongoing roll-out of Sprint Spark, and the evolution of Sprint Framily, we plan to build the best customer experience in the industry," said Hesse.

Sprint will host a press event in New York City later in the morning, where Hesse said Sprint plans to show "the potential for Framily as an innovation platform."

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