Sprint Adds Net Subscribers, But Losses Grow

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Thanks in part to its new 4G Evo smartphone, Sprint Nextel for the first time in three years added net total wireless customers in the second quarter. The nation's third-largest carrier gained 111,000 subscribers in the quarter, reflecting the continued growth of its prepaid and wholesale businesses as well as demand for the Evo.

The results contrasted sharply with those a year ago when the beleaguered operator lost nearly a million customers, and the prior quarter, when it lost more than half a million. On the post-paid side, Sprint lost a net 228,000 customers with the exodus of 364,000 from the Nextel network.

But it added 136,000 customers to its Sprint service, buoyed by sales of the HTC-made Evo, which the carrier has promoted heavily as the nation's first fourth-generation phone. The popularity of the Android-powered device launched in June has even led to spot shortages.

During the company's earnings conference call Wednesday, however, Sprint CEO Dan Hesse seemed reluctant to give the new smartphone too much credit for the carrier's quarterly turnaround. While it helped, he said the company could have achieved overall wireless subscriber net growth even without the Evo rollout. "Our improvements are foundational," he said.

Citing improving business trends, Hesse added Sprint expects to have total net wireless subscriber gains for the remainder of 2010 and fewer net postpaid losses in the second half of 2010 compared to the first half.

On the prepaid side in the second quarter, the company added a net 173,000 customers on the strength of its Boost Mobile brand and the re-launch of Virgin Mobile, which it acquired last year for $483 million. Sprint also added a net 166,000 wholesale customers. Its total customer base, including both pre- and post-paid customers, is 48.2 million.

Sprint said its churn rate was a best-ever 1.85% in its post-paid business and 5.61% on the prepaid side -- down from 2.05% and 6.38%, respectively, a year ago.

Overall, the company reported a second-quarter loss of $760 million, or 25 cents a share -- nearly double the year-earlier loss of $384 million, or 13 cents a share. The latest earnings figures included a 10-cent charge tied to the increase in valuation allowance on deferred tax assets.

Despite AT&T switching to tiered-pricing for wireless data service, and Verizon Wireless planning to follow suit with the rollout of its 4G LTE network, Sprint has no plans to do so at present. "That doesn't mean we won't. We will continue to monitor the situation -- but so much of our brand -- what we're showing is, customers will pay a premium for simplicity," said Hesse. He added that Evo 4G customers are using 3.5 times more data than the carrier's other smartphone users.

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