Gas prices and higher mortgage rates have not affected the demand for Sprint Nextel Corp.’s wireless services, the carrier’s chief financial officer told analysts last week.
Paul Saleh’s remarks were made during a parade of wireless executives at conferences in New York, hosted by investment firms Lehman Bros. and Morgan Stanley.
Saleh said that Sprint Nextel has “seen no correlation” between rising costs for American consumers and either demand for wireless or bad debt.
He went on to say that Sprint Nextel plans to adjust its pricing plans to be more relevant to the majority of its prime, postpaid customers, about 50 percent of whom use fewer than 300 voice minutes per month. About 35 percent of Sprint Nextel’s prime customer use fewer than 200 minutes per month, Saleh added, and most of the subscribers who talk only a few hundred minutes each month also don’t use many data services.
Saleh also said that Sprint Nextel plans to move aggressively to take a chunk of what the company expects to be a $30 million incremental market in mobility services. He said the third-largest carrier’s spectrum position, particularly its large holdings in the 2.5 GHz band, will give it a time-to-market advantage over other carriers. Sprint Nextel is testing 4G technologies, as well as talking with international operators and lining up a network of vendors to support its eventual technology choice. Saleh said that Sprint Nextel’s choice will be based on whatever technology allows the carrier to “be ultra-disruptive in the marketplace,” as well as have a global reach.
In terms of its cable joint venture, Sprint Nextel expects to begin rolling out devices with converged capabilities, such as e-mail and voice mail, by the end of the third quarter. Such devices likely would be available only to customers with bundled services from the joint-venture partners, Saleh said.
Meanwhile, executives from both Verizon Wireless and majority parent company Verizon Communications Inc. fended off analysts’ questions about the status of minority parent Vodafone Group plc’s 45-percent stake in Verizon Wireless, and reiterated past statements that Vodafone is aware of Verizon Communications’ interest in acquiring all of Verizon Wireless. Denny Strigl, president and chief executive officer of Verizon Wireless, told analysts that no matter what the two parent companies end up doing, he didn’t think it would affect the way that Verizon Wireless operates.
Meanwhile, Verizon Communications’ CFO said that the company is seeking to make significant job cuts in the next 18 months.
“I think you will see some reductions on the wireline side that are significant,” said Doreen Toben, executive vice president and CFO for Verizon, when asked about possible job cuts.
Verizon previously had announced as many as 7,000 positions would be slashed as a result of its acquisition of MCI Inc. The company employed about 252,000 people at the end of the first quarter, according to Verizon’s regulatory filings.
Leroy Carlson Jr., president and CEO of U.S. Cellular Corp.’s parent company, Telephone and Data Systems Inc., said that while TDS had previously indicated that it might try to acquire the 19 percent of U.S. Cellular’s stock that TDS doesn’t already own, there is no time frame for such a transaction. Carlson indicated that TDS would wait until the two companies’ stock prices “are more in line.” U.S. Cellular’s stock has climbed steadily for more than a year, from trading below $50 per share in January 2005, to about $62 today. TDS, meanwhile, underwent a stock split last spring, so its stock price went from around $80 to about $40 per share.
Carlson also said that as far as U.S. Cellular’s network strategy, the company does not plan to introduce CDMA2000 1x EV-DO upgrades to its network until 2007 at the earliest, when EV-DO Revision A is expected to be available. U.S. Cellular is testing EV-DO Revision 0 in its Milwaukee market, but Carlson said the company had experienced “no disruptive effects” from not having widespread wireless broadband-and that even when Rev. A does become available, U.S. Cellular would first test the technology to make certain that enough customers want the service for it to be profitable. U.S. Cellular uses 1x technology for data services.
Both U.S. Cellular and TDS have completed the financial restatements that they had started last November, and now are catching up on regulatory filings that were delayed by the need to finish the restatements, Carlson said. He added that the companies expect to file their 10-K forms for 2005 imminently, and that the filing for the first quarter of 2006 should be done by the end of June.
