Sprint trims subscriber losses in Q3, hangs on as third-largest U.S. carrier

In his first earnings call, CEO Marcelo Claure notes 'headwinds,' foresees transformation

Sprint had 55 million wireless "connections" at the end of the third quarter, allowing it to remain as the third largest U.S. carrier, just ahead of T-Mobile.

But that might have been the best news, as Sprint also announced another 2,000 worker layoffs, on top of 5,000 jobs cut from January through mid-September. The latest layoffs will help produce $1.5 billion in cost reductions and will bring the company down to just over 30,000 workers.

Some analysts had predicted Sprint would fall to fourth place behind T-Mobile, which has 53 million wireless customers, due to Sprint's losses of postpaid phone subscribers. Those customers pay monthly bills after using a wireless service, as opposed to paying in advance.

In the company's earnings call late Monday, Sprint CEO Marcelo Claure announced a loss of 500,000 postpaid phone connections during the quarter that ended Sept. 30. That's down from a loss of 620,000 in the second quarter and 693,000 in the first quarter. For the first nine months of the year, Sprint has lost about 1.8 million postpaid customers.

Still, Claure said that Sprint has worked to stabilize is subscriber base with new family service plans and special pricing for the iPhone 6, which he said has been the best iPhone launch by Sprint ever. He cited record sales, but did not disclose any numbers.

"I have now completed 85 days [as CEO], and couldn't be more excited about the progress made in those short weeks...," Claure said. "We have started a transformation, while the company faces headwinds. "

The biggest determining factor in a carrier's success is postpaid phone customer growth, Claure noted.

Sprint's wireless customer base includes 29.9 million postpaid connections (for all devices, not just smartphones); 15.1 million prepaid connections; and another 9.9 million connections made from Sprint affiliates, wholesale customers and devices of various types.

In contrast, T-Mobile said last week it had added 2.3 million subscribers in the same quarter, giving it 52.89 million customers.

With the benefit of wholesale and affiliate connections, "we still have the third most [connections]," Sprint spokesman Scott Sloat noted in an email.

Remaining in third place gives Sprint bragging rights, but it wasn't something anyone at Sprint highlighted, given T-Mobile's strong surge in recent quarters and Sprint's problems.

Despite the overall third quarter customer losses, both September and October saw year-over-year improvements -- the first such improvements in 2014, Claure said.

Overall revenues for the period (which is now Sprint's second fiscal quarter because of a recent change in its fiscal year) totaled $8.5 billion, with an operating loss of $192 million after expenses.

Independent analyst Jeff Kagan noted that Sprint is "in the early stages of a transformational journey. Sprint has struggled for years. The marketplace knows it will take several years to turn the company around....

"I still believe the marketplace is better and stronger with four strong, growing competitors and I hope Sprint can make this happen," Kagan said.

Copyright © 2014 IDG Communications, Inc.

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