Sprint's bleeding continues: Loss narrows even as more customers defect

The carrier, meanwhile, says it's brought LTE to 41 more cities, and its Sprint Spark enhanced network to another six cities, as it trudges through its painful network upgrade.

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Lynn La/CNET

Sprint's painful transition continues.

The long slog of improving its network continues to take a toll on Sprint's customer base, with nearly half a million net customers leaving the carrier in the first quarter of 2014, a 12 percent higher level of defection than a year ago.

The Overland Park, Kan., wireless provider on Tuesday posted a first-quarter loss of $151 million, or 4 cents a share, compared with a year-ago loss of $643 million, or 21 cents a share, when the company hadn't yet been acquired by Japanese carrier SoftBank or acquired 4G network provider and partner Clearwire. The year-ago "combined" results would have been a loss of $652 million.

Revenue inched up less than 1 percent to $8.88 billion.

Analysts, on average, forecast a loss of 9 cents a share and revenue of $8.79 billion, according to Thomson Reuters.

Sprint, the nation's third-largest wireless carrier by subscribers, has suffered along a downward trajectory for its customer base as it deals with the complicated upgrade of its network. The company is overhauling its existing 3G network and adding faster 4G LTE, but the difficult transition has led to rocky service and disgruntled subscribers.

Sprint said Tuesday that its 4G LTE network now covers 41 more cities, for 443 in total, encompassing more than 225 million people. Major additions include Orlando, Phoenix, Minneapolis, and Long Island, N.Y. The carrier is on track to cover 250 million people by the middle of the year. Its Sprint Spark service, which it boasts is faster because it uses three different bands of spectrum, is available in six new cities, for a total of 24 to date.

"The finish line is in sight, in our marathon to completely rip and replace our network from the ground up," said Sprint network chief John Saw during an investor conference call today.

The struggles come at an inopportune time, with T-Mobile beating the drum and winning over new customers with new programs and discounts. AT&T responded accordingly, and actually fared well with surprisingly strong subscriber growth in the period, while Verizon Wireless took a hit and lost basic and 3G phone customers.

Sprint has responded with its Framily plan, a friends-and-family program in which the savings increase as customers add more people to the plan. The company's chief financial officer, Joe Euteneuer, told investors in a March conference that the early reaction to the program has been better than expected.

In the first quarter, Sprint lost a net 221,000 contract customers, while its prepaid business -- traditionally a strength at the company -- lost 364,000 customers. The losses were offset by a gain of 281,000 wholesale and affiliate customers, or from partners that resell Sprint service under a different brand. The company added 516,000 tablets, which are classified as post-paid customers, suggesting it lost nearly three-quarters of a million contract customers.

Its total customer turnover rates for both contract and prepaid customers rose over a year ago.

CEO Dan Hesse said he expects things to pick up in the latter part of the year as its network improvements start to wrap up.

"I'm confident we're building a solid foundation to postpaid growth in second half of the year," he said.

Sprint touted its first-quarter adjusted earnings before interest, taxes, depreciation, and amortization, which it believes is a truer measure of its performance because its strips out extraneous items. That rose $300 million to $1.84 billion.

Sprint expects 2004 adjusted EBITDA to be between $6.7 billion and $6.9 billion, and full-year capitalization to be around $8 billion.

The company is slated to hold a conference call at 8 a.m. ET/5 a.m. PT. Check back with CNET for all of the details.

At an event later today, meanwhile, Sprint plans to unveil what it likely hopes will be the next draw for customers. The "Hear it for yourself" event could bring an announcement related to high-definition audio services. Stick with CNET for a live blog starting at 10:45 a.m. ET / 7:45 a.m. PT.

Sprint shares rose 2.6 percent, or 20 cents, to $7.63.

Updated at 6:32 a.m. PT: To include comments from the executives and additional stats.

 

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