Sprint weathers iPhone onslaught well in first quarter

Summary:Sprint delivered better-than-expected first quarter results as the company added 1.1 million total wireless subscribers, improved its postpaid churn and topped revenue expectations.

Sprint delivered better-than-expected first quarter results as the company added 1.1 million total wireless subscribers, improved its postpaid churn and topped revenue expectations.

The No. 3 wireless carrier reported a net loss of $439 million, or 15 cents a share, on revenue of $8.3 billion, up 3 percent from a year ago. Wall Street was expecting a loss of 22 cents a share on revenue of $8.19 billion.

In other words, Sprint weathered the assault from Verizon Wireless iPhone 4 and AT&T's $49 iPhone 3GS pretty well.

On a conference call with analysts, CEO Dan Hesse said:

This quarter's performance is particularly noteworthy because of the unique changes in the first quarter's market dynamic. Verizon announced its iPhone, and AT&T responded with price. We felt we could increase our price for data on smart devices so that we could maintain Sprint's unique customer-friendly unlimited and worry-free data plans. Our strengthening brand helped us mitigate what otherwise would have been difficult to navigate increasing our price in the face of a new iconic competitive device and widespread industry price pressure.

Nevertheless, Hesse said there's an ongoing iPhone threat ahead. Hesse declined to comment on whether Sprint will get the iPhone. Hesse added:

We do typically see a significant impact upon the launch of a new device, or in this case, the iPhone 4 on a new carrier, Verizon. The iPhone does continue to be a significant competitive threat to us, first in the hands of AT&T and then tin hands of Verizon. The additional impact the iPhone has had on us recently continues to have it as AT&T is pricing the iPhone 3G S at $49. So you have to think about both Verizon's iPhone 4 and AT&T's response to that, which I alluded to in my opening comments, not only continuing to offer the iPhone 4 but offering a lower priced 3G S. So the iPhone continues to be quarter after quarter a successful device and one that provides very strong competition to Sprint, but needless to say Verizon's introduction of their new iPhone in Q1 this past quarter did have a notable impact on our net add performance for the quarter.

By the numbers:

  • Sprint added 1.1 million total wireless subscribers in the first quarter.
  • The company added 310,000 net postpaid customers with 846,000 prepaid.
  • Sprint's churn was 1.81 percent on the postpaid side and prepaid churn was 4.36 percent.
  • However, Sprint lost 114,000 net postpaid subscribers in the quarter, 80 percent better than a year ago. Most of those losses were due to the loss of Nextel customers on Sprint's iDEN network. The CDMA network added 253,000 net postpaid subscribers.
  • As for the outlook, Sprint reconfirmed its 2011 forecast projecting that it will continue to add subscribers relative to 2010. Capital spending will be about $3 billion.
  • Sprint ended the quarter with 51 million total customers.

What remains to be seen is whether Sprint can keep up its defenses in the long run. T-Mobile's pricing was a big topic on the conference call. Meanwhile, Sprint may become a distant No. 3 if AT&T buys T-Mobile.


Sprint, Clearwire forge $1 billion network deal; Serious questions remain

Topics: Smartphones, Hardware, iPhone, Mobility, Telcos


Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.