February 8, 2013
Sprint Loses Whopping $1.3B In 4Q Despite Growing Revenue
redOrbit Staff & Wire Reports - Your Universe Online
Sprint Nextel reported its fourth-quarter and full year results on Thursday, posting modest quarterly revenue growth and smaller-than-expected subscriber losses amid strong smartphone sales.
The company said it lost $1.32 billion during the fourth quarter, or 44 cents per share, compared with a loss of $1.30 billion, or 43 cents per share, during the same quarter last year. Total revenue also grew to over $9 billion from $8.72 billion. For the entire 2012 fiscal year, however, the nation´s number 3 wireless carrier lost $1.8 billion on $35.3 billion in revenue.
Sprint, which is set to merge with Japan's SoftBank Corp. soon, attributed its losses to accelerated depreciation costs, Superstorm Sandy and the continuing costs associated with its Network Vision project.
The company also said it added 401,000 new customers to its subscriber base in the fourth quarter, 333,000 of which moved from Nextel, a figure that led some analysts to scrutinize such a heavy dependence on former Nextel customers.
Sprint is shutting down its Nextel network over the next few months.
"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, in an interview with Reuters.
Rethemeier and other analysts had expected Sprint to add as many as 600,000 customers in the quarter.
Sprint CEO Dan Hesse said he was disappointed that the company´s fourth quarter churn rate had grown to 1.98 percent, blaming the increase on an extensive network upgrade project that caused some customers to leave.
But Hesse said the numbers should rebound after it decommissions the Nextel network, advances its network upgrade and boosts its success in selling tablet devices such as Apple's iPad.
"We think we'll have good numbers on the Sprint side in the second half of the year," Hesse said.
Sprint's top rivals have reported solid growth through growing tablet sales and associated data-share plans that allow customers to add multiple devices to their monthly smartphone data allotment.
But Hesse said Sprint is not considering moving to data share plans at this time.
Sprint is also is seeking to acquire Clearwire Corp., a broadband network operator of which Sprint is the majority owner, for $2.97 per share. The deal is awaiting approval from Clearwire's board, but is facing potential hurdles amid a $3.30 per share buyout offer from Dish Network Corp.
Clearwire appeared to endorse the Sprint deal in a proxy filing last week but says it is still evaluating the Dish offer.
"It is their duty to try to get the best they can for their shareholders," Hesse said.
"Both Clearwire and Sprint are working to get our transaction approved."
Sprint reported a net loss of 243,000 subscribers in the fourth quarter, a figure exceeding some analysts´ expectations.
The nation´s second largest wireless carrier AT&T added 780,000 net subscribers in the quarter, while market leader Verizon Wireless added 2.1 million net subscribers.
Among the brighter points of Sprint´s quarterly results were strong sales of Apple´s iPhones, which the carrier said helped it gain new customers. Sprint said it sold 2.2 million of the devices during the fourth quarter, 38 percent of which went to new customers.
The company reported full-year sales of 6.6 million Apple smartphones and noted that 89 percent of its postpaid sales were also smartphones.
Sprint is spending heavily to upgrade its network from WiMax 4G to LTE 4G, and forecasts 2013 adjusted operating income before depreciation and amortization (OIBDA) of $5.2 billion to $5.5 billion.
Shares of Sprint´s stock fell 3 cents, or 0.52 percent, on Thursday, closing at $5.74 on the New York Stock Exchange.