Sprint Nextel Corp., which is seeking to sell 70 per cent of itself to Japan’s Softbank Corp., posted higher fourth-quarter revenue on Thursday but its subscriber numbers fell short of some Wall Street targets.
Overall, the No. 3 U.S. mobile service provider had fewer-than-expected subscriber losses, but analysts were disappointed with growth on its Sprint network. It is shutting its Nextel network by the end of June.
It added 401,000 Sprint customers in the quarter, including 333,000 that moved from Nextel, but analysts were disappointed it depended so heavily on Nextel customers.
“I would rather they grow the Sprint business faster than they did and shut down the Nextel business faster,” said Hudson Square Research analyst Todd Rethemeier, who had expected the company to add 600,000 Sprint customers in the quarter.
Sprint chief executive Dan Hesse told analysts on a conference call he was unhappy with the 1.98-per-cent churn rate, reflecting customer defections, in the fourth quarter. It was higher than the third-quarter rate.
Mr. Hesse blamed the increase on a massive network upgrade project that caused some customers to turn away.
He said “Sprint will emerge as a more competitive company” after the planned closing at midyear of a $20-billion deal with Softbank, which is known for being a highly successful competitor in Japan.
Sprint posted a net loss of 243,000 subscribers in the quarter, which was better than the average view of a loss of 292,000 from five analysts contacted by Reuters.
The numbers were well behind bigger rival AT&T Inc., which added 780,000 subscribers in the quarter and market leader Verizon Communications Inc., which added 2.1 million net subscribers.
However, Sprint said the Apple Inc. iPhone helped win new customers. Of the 2.2 million iPhones it sold in the quarter, 38 per cent were to customers who were new to Sprint.
Sprint said on the conference call that it would be hit by a net loss of roughly 1.3 million to 1.4 million prepaid customers in the second quarter because of a regulatory change related to customers who receive a government subsidy for their cellphone.
The same issue will contribute to net customer losses in the range of 500,000 to 600,000 in the first half of 2013, at wholesale customers which rent space on Sprint’s network.
Sprint, which is spending heavily to upgrade its network this year, forecast 2013 adjusted operating income before depreciation and amortization in a range of $5.2-billion (U.S.) to $5.5-billion.
It posted a quarterly loss of $1.32-billion, or 44 cents per share, compared with a loss of $1.30-billion, or 43 cents per share in the year-ago quarter. Revenue rose to $9.01-billion from $8.72-billion. Wall Street expected $8.92-billion, according to Thomson Reuters I/B/E/S.
On top of its Softbank deal, Sprint is also looking to buy out Clearwire Corp. for $2.97 per share. Sprint, which is the majority owner of Clearwire, needs approval from a majority of Clearwire’s minority shareholders and is facing potential obstacles.
The minority shareholders have complained about the deal price, and satellite television operator Dish Network Corp. countered with an offer of $3.30 per share last month.Report Typo/Error