Sprint Q4: Loss widens, 1 million subscribers jump ship

Sprint Q4: Loss widens, 1 million subscribers jump ship

Summary: UPDATED. The cellular giant saw its quarterly loss widen as more than 1 million subscribers left the company, thanks to the Nextel side of the business.

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TOPICS: Networking
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Continuing its running streak of weak performance quarter on quarter, Sprint reported a wider loss for its latest round of earnings. 

The cellular giant reported a fourth quarter net loss of $1.32 billion, or 44 cents a share, a flat result on the same quarter a year ago. Revenue rose to $9 billion for the quarter. 

Wall Street was expecting a loss of 46 cents per share on revenue of $8.92 billion. 

Sprint noted that it suffered a $45 million loss, or 1 cent per share, related to impacts from Hurricane Sandy. But, it's worth noting—at least on this impromptu nautical theme—that Sprint's rocky boat wasn't hit half as badly as rival services, notably AT&T and Verizon. 

For the full year, consolidated net revenue stands at $35.3 billion, an increase of 5 percent on the year-ago quarter. 

Sprint saw a massive increase in sales since the company started selling the iPhone. The ray of sunshine is that Sprint's postpaid subscriber base grew for the eleventh consecutive quarter.

Breaking this figure down, the third largest U.S. cell network added 401,000 postpaid subscribers, as well as 525,000 new subscribers on pre-paid. Sprint said its postpaid net additions are up 18 percent year-over-year. 

During the quarter, however, 1.02 million customers abandoned the Nextel ship, offsetting the not-so-bad result on the Sprint side of the business.

By comparison, AT&T sold 8.6 million iPhones while Verizon sold 6.2 million. For the third-place cellular company in the U.S., it shows that while the AT&T—Verizon duopoly is stronger than ever, the distance between first and second, and third place is even wider.

Sprint also noted it had sold 2.2 million iPhones during the fourth quarter, out of a total of 4 million 4G LTE smartphones, or 6.6 million iPhones throughout the year. 38 percent of these were new customers.

The company also noted that it ended its 2012 fiscal year with $8.2 billion in cash and equivalents.

Screen Shot 2013-02-07 at 07.05.11

In prepared remarks, Sprint chief executive Dan Hesse noted that Sprint's strong performance was "fueled by record wireless service revenue" on the Sprint side, and helped gain strong net additions. 

As a result, quarterly Adjusted OIBDA performance improved year-over-year in spite of significant cost increases related to Network Vision and the iPhone, both of which are key investments for our business that we expect will improve the customer experience and lead to growth in the years ahead.

It comes during a precarious patch in which Japanese cellular giant Softbank is seeking to acquire a 70 percent stake in Sprint for $20.1 billion, so Sprint can ultimately invest a further 50 percent stake in Clearwire.

Sprint already owns half of the mobile broadband company, but as it seeks to expand its 4G LTE offering, Sprint needs more in terms of ownership and spectrum. 

On the earning conference call, Hesse remarked regarding the Sprint—Softbank deal, but didn't give away anything we didn't already know, let alone corporate or state secrets:

The investment by Softbank combined with the operational improvements over the last five years creates a pathway for growth. As mentioned, we announced transactions with Softbank, U.S. Cellular and Clearwire in the fourth quarter but we didn't let these initiatives take our eye off of operations. We look forward to closing these transactions, and we believe that Sprint will emerge as a more competitive company. 

He also remarked:

We're in the process of continuing to work with [Softbank]. Once we close the transaction will come back and give you an update. We've been trying to be as wholesome as we can but we don't want to get ahead of ourselves. 

Sprint's fourth quarter by the numbers:

  • 6.1 million smartphones sold during the quarter;
  • 2.2 million of those overall smartphone sales were iPhone;
  • 38 percent of iPhone activations are new customers;
  • 4 million 4G LTE capable phones sold (although, not necessarily connected to the LTE network);
  • 4G LTE available in 58 cities around the U.S., with an eye on 170 cities in the "coming months".

Sprint ($S) was down slightly in pre-market trading on the New York Stock Exchange.

Screen Shot 2013-02-07 at 08.20.05
$S trading down in the pre-markets by 8:20 a.m. ET. (Credit: Google Finance)

Updated at 9:00 a.m. ET: with details from the Sprint Q4 conference call.

Topic: Networking

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7 comments
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  • sprint

    One of the biggest issues with sprint, and I have been a customer for 6 years is their lack of upgrading to 4g in what appears to be rural areas. I live in South Mississippi and the other phone companies offer 4g in my area but Sprint has no plans in the immediate time period of offering 4g. So while my phone is on their Everything program and I am charged a additional 4g rate added to my bill I do not get the benefit of 4G
    guitarest
    • False start

      Sprint suffered a false start when they gambled on WiMax for 4G phone data services, and then had to make an about-face and switch to LTE. That's why they don't offer much in the way of 3G outside major metropolitan areas. They are expanding LTE coverage at a decent clip, so there may be hope yet for 4G Sprint coverge for you.
      dsf3g
  • Old Technology

    Sprint is still using CDMA technology. Sorry, but the rest of the world has long since moved on to GSM. Try using a Sprint phone overseas, and you'll realize how archaic, inadequate and useless their services (and their phones) actually are.

    I've been with Sprint for a few years now, and I've learned this firsthand. During my stay in SE Asia, I've been forced to buy an extra phone in order to even have cellphone service. CDMA has long been abandoned in favor of GSM in the rest of the world.

    Sprint, why do you stick with old technology? Dinosaur.

    And yes, Sprint has been slow to expand 4G service to rural areas. When we go to our second home on the coast, the service there is horrible -- if we can even reach a tower.

    As soon as my contract expires, there will be another two phones jumping ship.
    roncemer
    • Several reasons...

      1.) Verizon is using CDMA technology as well. Somehow, they manage to go back and forth with AT&T for first and second place.

      2.) GSM is not completely the best wireless technology to ever exist simply because everyone else uses it. Also, while Europe is mostly GSM, much of Asia (including Japan) is CDMA. Admittedly a blog post, but this (http://androidforums.com/lounge/82363-why-cdma-better-than-gsm.html) gives a nice explanation as to the advantages of CDMA.

      3.) Overseas travel always involves some form of planning. Getting a locally useful phone is a part of that planning. That's not Sprint's problem.

      4.) Sprint has been using CDMA for over a decade. They've got tens of billions invested in the tech, millions of users have working phones for it (some likely still had iDEN). To switch to GSM would either require all their customers change their phones, or they'll have to delay their LTE rollout due to the spectrum squash.

      5.) You signed a contract knowing that they were a CDMA carrier. They didn't lie to you about it.

      6.) Every carrier has dead zones. Yes, Sprint's affects you. As unfortunate as that is, the other carriers aren't guaranteed to be rainbows and unicorns.

      7.) The majority of Americans traveling overseas have either a.) done without a cell phone while there, b.) paid roaming charges, c.) gotten a second phone for the travel time, or d.) chosen their carrier to accommodate their international travel.

      If I were Sprint, I wouldn't miss you.

      Joey
      voyager529
  • Who is getting the customers?

    What service are the customers jumping to? Are they going to prepaid, or are they going to another provider. I find it hard to believe that everyone is jumping ship for better smartphones. My hunch is that they are losing customers to the cheaper wal-mart and grocery store prepaid phones. I find it impossible that sprint had worse customer service than att or verizon. Before i switched to prepaid i was considering t-mobil or sprint, because att had enraged me with their epically bad service and billing. I did not consider verizon because of all the horror stories i had heard about them.

    When i was deployed in japan i had AU, and friends of mine had vodophone or softbank. I hope that if softbank buys out sprint, that they bring their business over here, i would switch to them in a heartbeat.
    scummcdirt
  • I left Sprint years ago

    I have been with Sprint and T-Mobile before ending up with at&t and can tell you for a fact that Sprint hands down has the worst customer service of the three.
    eye4bear
  • Who is getting the customers?

    You ask ... well, I don't have any numbers, but Republic Wireless is working nicely for one of our former Sprint lines and they see popular. Daughter is off to college and although Sprint has "full" coverage where the school is located, signal is intermittent at best in the buildings. However, the school's WiFi is ubiquitous, so the Republic Wireless offering is perfect: unlimited calling/text/web for $20 a month. Whenever the phone can get a WiFi connection, it uses IP telephony. When it can't get WiFi, it uses a cell signal ... and Republic's contract for cell service is through Sprint ...

    Today I was downtown Columbus, Ohio, trying to use my Sprint service and it was a very poor quality connection. Other Sprint users have been having a lot of problems in the area as well. Sprint has done a very poor job of supporting 4G so far. When they first deployed WiMax near my home I got a 4g phone. On a really good day, outside, I can pick up 4G. Never in my house, or in most places in the area. Purchasing a Motorola Photon, I was promised expanded 4G area in which to use it and that the phone would be upgraded to Ice Cream Sandwich or some such. Motorola/Sprint has reneged on that promise as well. At the same time Sprint hit me with a $10/month/line fee for a 4G phone and then later expanded that fee to any SmartPhone, despite my having a "data everything plan". I am still struggling to understand how a SmartPhone doesn't fall under "unlimited data usage/everything data"? Then there are a number of little hidden fees and such ... don't tell me my price is XXX and then nickle and dime me, not if you want my business.

    As long as Sprint treats customers the way they have treated me and so many others, they will lose business. If you promise something, like an OS upgrade, hold to that promise or provide a comparable replacement. If you promise service, deliver it before you go galloping off on a new venture. As my lines come up for renewal, they are not being renewed. After close to a decade, I am taking my business elsewhere. Republic Wireless, T-Mobile ... never AT&T or Verizon. They are worse than Sprint. Way back in '01 or so, I got an AT&T phone which promised web service. I spent literally days trying to get the thing to do its initial sync connection - on multiple occasions, per AT&T's instructions, I had to leave it just sitting for hours on end trying to get it to do its thing. Support was less than useless, they made it worse. I finally got tired of it and told them to cancel the service. Then they wanted me to pay them for the service contract they never were able to get working. So long AT&T.

    Verizon - they want you to pay them to unlock functionality built into the phone. Uh, uh. Isn't happening. Don't cripple my device and then tell me I have to pay $10/mo to activate this feature, $20/mo to activate that feature, etc. Bottom Dwellers is what they are.
    Tumbleweed_Biff