Sprint posts $1B in Q4 losses as it ekes out customer gains
Sprint shows the slowest customer growth out of all the carriers as it continues to work through its painful network upgrade process.
While Sprint is seeing a return to growth, it also continues to bleed money.
Sprint, acquired by Japanese carrier SoftBank in July, on Tuesday posted a fourth-quarter loss of $1.04 billion, or 26 cents a share, which was narrower than its year-earlier loss of $1.32 billion, or 44 cents a share.
The net loss included $1.53 billion in depreciation and write-off of assets related to its defunct Nextel business, as well as $206 million in costs related to its severance payments for recent layoffs and from getting out of lease agreements.
For the period ended Dec. 31, its revenue inched up to $9.14 billion from $9 billion a year ago. Analysts, on average, had expected revenue of $8.99 billion, according to Bloomberg.
After a particularly tough year, Sprint is looking to better times ahead, with an eye on improvements to take hold by the second half, when the company completes a larger percentage of its network upgrade.
"I feel we've turned a corner," Chief Financial Officer Joe Euteneuer said on a conference call with analysts on Tuesday.
Wall Street was a bit mixed on the results, but were relatively pleased with the performance.
"Some good; some bad; but generally better than we thought," said New Street Research analyst Jonathan Chaplin
But from a customer growth perspective, Sprint is once again bringing up the rear of the pack.
The company added a net new 477,000 wireless customers in the fourth quarter, a dramatic improvement over the defections suffered a year ago, but still far short of its rivals. More importantly, the number of new contract customers shrank considerably, falling to just 58,000 new subscribers from 401,000 a year ago. Stripping out the 466,000 tablet customers added, and it actually lost 408,000 voice customers.
Contract customers are considered the most valuable because they are committed to long-term service agreements and tend to pay more each month. AT&T added 780,000 contract customers, while Verizon Wireless added 824,000 phone customers. T-Mobile added 869,000 contract customers in the period.
Prepaid customer growth at Sprint saw a less significant slowdown, although the carrier's wholesale business swung back to growth after losing customers a year ago.
Sprint is at a disadvantage because it is slowly upgrading its network, having fallen behind larger rivals Verizon Wireless and AT&T, and even No. 4 T-Mobile in its LTE deployment. With customers increasingly looking to higher speeds and reliable coverage, Sprint has lagged on both.
The company has pinned its hopes on Sprint Spark, the brand for its souped-up LTE network utilizing multiple bands of spectrum for faster service, but the deployment of Sprint Spark markets and areas is limited. Sprint said today that it had deployed its upgraded network to Philadelphia and Baltimore.
Steve Elfman, the president of Sprint's network and technology unit, said that he expects to complete the roll out of HD voice by the middle of the year. T-Mobile already offers HD voice, and AT&T said it would begin deployment later this year.
SoftBank and Sprint had recently attempted to lay the groundwork to acquire T-Mobile, believing the combined businesses would be better able to compete against AT&T and Verizon. But regulators have reportedly expressed their resistance to the deal, causing Sprint and SoftBank leadership to regroup and rethink about a possible deal.
Updated at 6 am PT: To include additional financial information and a comment from the CFO.