Sprint loses $1.37B, sells 1.5M iPhones in Q2
The wireless carrier posts a wider loss due largely to the shutdown of its Nextel network, an investment in Clearwire, and ongoing costs related to its Network Vision plan.
Sprint Nextel saw its second-quarter loss widen because of ongoing costs related to the shutdown of its Nextel network, its Network Vision upgrade project, and its investment in Clearwire.
The Overland Park, Kansas, wireless carrier posted a loss of $1.37 billion, or 46 cents a share, on revenue of $8.84 billion. A year ago, it reported a loss of $863 million, or 29 cents a share, on revenue of $8.31 billion.
One-time costs include 26 cents a share for Network Vision, 6 cents a share related to the shutdown of Nextel towers, and 7 cents a share related to its investment in Clearwire, which currently provides 4G WiMax services for the carrier.
Analysts, on average, expected the company to post a per-share loss of 40 cents on revenue of $8.73 billion, according to Thomson Reuters.
Sprint will likely report several more quarters with wider losses as it goes through the transformation of its network, which will eventually be able to support multiple technologies, including its own faster 4G LTE network. But Network Vision, its Nextel shutdown, and the high cost of iPhone subsidies will continue to weigh on the company for the next few quarters.
Sprint is the distant third-place wireless carrier in the country, and has attempted to narrow the gap with its larger competitors by offering more attractive unlimited plans. While AT&T and Verizon Wireless are moving toward more tiered and, Sprint remains the only carrier to offer an all-you-can-eat buffet of data services such as streaming video, mobile Web, and Facebook status updates, all of which can be done on an iPhone.
The iPhone is the key component to its turnaround plans. Sprint sold nearly 1.5 million iPhones, far fewer than the number of iPhonesand sold. Still, the company boasted that 40 percent of its iPhone customers were new to the carrier.
Sprint isn't immune to the broader slowdown in customer growth of the wireless industry.
In total, the company added 283,000 net customers, thanks largely to the continued migration away from its Nextel service, which will be shut down next year. It added 442,000 contract customers under its Sprint service, but lost a net 688,000 customers under Nextel. Still, Sprint said it was able to capture 60 percent of the customers leaving Nextel, bringing them back to the Sprint side.
Sprint said it will completely decommission the Nextel network by next year.
As a result of the Nextel numbers, Sprint's total contract turnover rate rose to 1.79 percent from 1.75 percent. Prepaid turnover improved to 3.53 percent from 4.14 percent.