Sprint posts Q2 loss of $1.6B as 2M subscribers drop off

Well, it's only supposed to get better from here.

That's the attitude Sprint is likely taking after posting a net loss of $1.6 billion and net subscriber losses of 2 million. While the numbers look bad, there remains reason to be optimistic.

Sprint was officially acquired by Japanese carrier SoftBank earlier this month, a deal expected to bring capital and expertise to the company. The quarter represented the last one in which Sprint was operating two separate networks, its core Sprint network and a different, incompatible Nextel network. The Nextel service was shut down at the end of last month, eliminating what had been a distraction, financial burden, and primary source of customer defections.

The company reported on late Monday a loss of $1.6 billion, or 53 cents a share, compared with a year-earlier loss of $1.37 billion, or 46 cents a share. Results were affected by the Nextel shutdown, which included $430 million in the write-off of Nextel assets, as well as non-cash charges of $623 million. On a per-share basis, the Nextel shutdown cost Sprint 36 cents.

Revenue inched up slightly to $8.88 billion, driven by record Sprint service revenue of $7.2 billion.

Analysts, on average, forecast a per-share loss of 30 cents and revenue of $8.73 billion, according to Thomson Reuters.

Sprint's turnaround comes at a time when larger rivals AT&T and Verizon Wireless are looking to widen their leads and smaller rival T-Mobile looks resurgent. With much of the wireless game dependent on the strength of their networks, Sprint had fallen behind, particularly with its 4G LTE deployment.

Why Sprint is taking its sweet time with 4G LTE

Sprint, however, said on Monday that it had extended its 4G LTE network to 41 new markets, for a total of 151 markets.

Sprint is hoping SoftBank gives it the spark it needs to press forward with its recovery. In addition to relieving itself of the burden of Nextel, it managed to scoop up the wireless spectrum from 4G provider Clearwire, which will help augment and bolster Sprint's LTE network down the line.

Its customers largely came from the Nextel side, where it lost 1.3 million customers. But Sprint's own prepaid and wholesale businesses also suffered losses. Only Sprint's core service remained in the red, adding a net 194,000 customers in the period.

Sprint sold 5 million smartphones and 1.4 million iPhones. The company said 41 percent of iPhones were sold to customers new to the service.

As a result of the Nextel defections, the company's churn, or turnover rate, rose on both the contract and prepaid side.

Sprint did report a gain in average revenue per user. The contract business saw average revenue rise 4.4 percent to $63.59, while prepaid revenue rose 1.6 percent to $27.02.

Sprint also warned that its adjusted operating income before depreciation and amortization would fall between $5.1 billion and $5.3 billion, thanks to the impact of the SoftBank and Clearwire deals. It had previously forecast a range of $5.2 billion to $5.5 billion. The company said it would have raised its range had it not before the two transactions.

Sprint also said it expects 2013 capital expenditures of around $8 billion.

The company will hold its investor conference call at 5 a.m. PT, so check back with CNET for additional details and color on its results.

Updated at 5:04 a.m. PT: to include additional details on its quarterly results.