Sprint looks toward transformation as losses continue

IDG News Service - Sprint Nextel posted another quarterly loss but reported progress toward becoming just plain Sprint, a company with more money and fewer networks, which it hopes to be by the end of this year.

The company is on track to shut down its obsolete iDEN network in the middle of 2013 and now expects to start reusing the iDEN frequency band at 800MHz for better LTE coverage starting in the fourth quarter of this year, network chief Steve Elfman said during a conference call on Thursday to discuss the fourth-quarter results. Previously, Sprint had expected to start reallocating that spectrum in early 2014.

Sprint is also holding on to about half its former Nextel customers as they leave the winding-down service. In fact, the "recapture" of those former Nextel customers for its CDMA and LTE services accounted for most of the company's net gain in postpaid subscribers in the quarter. Of the 401,000 net additions, 333,000, or 83 percent, were former Nextel users who switched to Sprint's main service.

Network Vision, Sprint's project to build a new, unified network with LTE, is also moving forward despite delays caused by Hurricane Sandy and problems at Sprint's vendors. The LTE network is available in 58 cities now and construction has started in more than 450 cities, the company said. Sprint expects to reach more than 200 million potential customers with LTE by the end of this year or early next year, Elfman said.

Key to Sprint's transformation is the company's pending takeover by Softbank and its planned acquisition of the rest of Clearwire that it doesn't already own. The company has forecast both deals closing in the middle of this year. Sprint expects to emerge as a more competitive carrier with more financial flexibility and greater spectrum resources. However, its buyout of Clearwire has run into turbulence in the form of a higher counter-offer by Dish Network.

Upon the close of the Softbank deal, Sprint plans to remove the "Nextel" from its name, formally showing off its intended transformation into a new company.

In the fourth quarter, Sprint lost US$1.3 billion, or $0.44 per share, roughly the same as it lost a year earlier. The loss included accelerated depreciation of about $400 million related to the Network Vision project, including the Nextel shutdown process. It also included a charge of $45 million related to the impact of Hurricane Sandy.

However, Sprint's revenue grew 5 percent to $35.3 billion, and its prepaid and postpaid subscriber numbers went up. The company sold about 2.2 million Apple iPhones, its highest quarterly sales yet for the device, with 38 percent of them bought by subscribers who were new to Sprint. Among the company's postpaid subscribers, 89 percent of the phones purchased were smartphones.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com