Sprint Corp. reported a disappointing 400,000 net customer additions during the second quarter, a 20-percent drop from the 505,000 customers the carrier added last year and below analysts estimates of between 450,000 and 500,000 subscriber additions. Sprint attributed the shortfall to an increase in deposit requirements during the quarter that impacted gross subscriber results.
However, total wireless revenues climbed nearly 12 percent from $3.6 billion during the second quarter of 2004 to $4 billion this year, including an 82-percent increase in wholesale and affiliate revenue from $124 million last year to $226 million this year. Wireless operating income surged nearly 50 percent from $418 million last year to $625 million this year.
Analysts noted that Sprint and Cingular Wireless L.L.C. both appeared to have lost market share during the quarter to Verizon Wireless, which posted an industry-record 1.9 million net customer additions during the quarter. Sprint is in the process of acquiring Nextel Communications Inc., which will bolster its position as the industry’s third-largest operator behind Cingular and Verizon Wireless.
Sprint’s wholesale and network affiliate customer growth also stumbled from 621,000 net customer additions during the first quarter of this year to 188,000 net customer additions during the second quarter. Sprint noted the wholesale growth reflected the completion of the transition of Qwest Communications International Inc.’s customer base to its network during the first quarter, seasonally lower net additions from mobile virtual network operator partner Virgin Mobile USA L.L.C. and the elimination of inactive subscribers from a reseller’s base.
Sprint ended the quarter with 26.6 million total customers on its network, including 18.7 million direct, 4.4 million wholesale and 3.5 million affiliate subscribers.
Customer churn improved from 2.3 percent during the second quarter of 2004 to 2.2 percent this year, while average revenue per user remained flat at $62. Sprint did note that data services contributed $6.50 to ARPU during the quarter, an increase from the $6 posted during the first quarter of this year. The company said it had 8.1 million data subscribers at the end of the quarter, including 7 million customers signed up to its PCS Vision service.
