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Sprint loses nearly 1.1M wireless customers in Q1

Q1 2008 report shows more trouble for Sprint's wireless segment

By Brad Reed
May 12, 2008 12:00 PM ET

Network World - Sprint Nextel Corp. today reported losing nearly 1.1 million wireless customers in the first quarter, marking the sixth time in the past seven quarters that the company has lost postpaid wireless customers.

Overall, the company reported a net loss of just more than $500 million for the quarter. Sprint said one major reason for its net loss was the poor performance of its wireless business, which saw a 9% decline in first-quarter revenue from its revenue in the first quarter of 2007. The biggest reason for this decline, said Sprint, was the loss of 1.09 million wireless customers during the first quarter, including the loss of 1.07 million postpaid subscribers. Additionally, Sprint reported that its wireless postpaid average revenue per user came in just less than $56, a 6% decline from the first quarter of 2007.

"As expected, our wireless business delivered weak financial results," said Sprint CEO Dan Hesse. "While the business will continue to face challenges in the short term, we are making progress in methodically attacking the sources of our performance issues."

Although Sprint has experienced a steady decline in postpaid wireless subscribers over the past year, the loss of 1.07 million in the first quarter of 2008 almost equals the company's total loss in postpaid subscribers for all of 2007. Sprint's well-publicized troubles with its wireless business have recently fueled rumors that the company is considering spinning off its Nextel unit, with Nextel founder Morgan O'Brien, who is currently CEO of telecom company Cyren Call, said to be an interested party.

Telecom analyst Jeff Kagan said that Sprint's continued poor performance and customer losses were to be expected for the first quarter of 2008, as Sprint forecast a net loss of 1.2 million customers. The real test, Kagan said, will come in the next year, after Hesse has had time to implement his turnaround strategy.

"Fixing Sprint Nextel will take several quarters," he said. "The company got off track and spent a few years wandering in the desert, and now it will take several quarters to nudge it back on track. ... There are a variety of areas that need attention, but nothing is unfixable. Over the next few quarters, we will start to see the company get stronger rather than weaker like we see in this quarter."

The financial news follows by less than a week Sprint's blockbuster announcement with Clearwire that they are combining their WiMax businesses to create a new $14.5 billion mobile broadband company.

Reprinted with permission from Story copyright 2012 Network World, Inc. All rights reserved.
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