Sprint Nextel continues customer slide

Sprint Nextel Corp.’s struggles continued during the fourth quarter of 2009 as the wireless industry’s No. 3 domestic carrier posted a net loss of nearly $1 billion and hemorrhaged more customers from its network. The news was not taken well by investors who sent the carrier’s stock down more than 9% in early Wednesday trading.
Sprint Nextel said it lost $980 million during the fourth quarter though the result was a 40% improvement compared with the $1.6 billion the carrier lost during the fourth quarter of 2008. For the full year Sprint Nextel posted a loss of $2.4 billion, which was a slight improvement compared with the $2.8 billion lost in 2008.
Sprint Nextel also increased capital expenditures slightly during the fourth quarter from $548 million in 2008 to $554 in 2009, though full-year capex spending was down 47% to $1.6 billion in 2009.
Sprint Nextel lost 148,000 total customers during the quarter bringing the total number of customers served on its networks to 48.1 million by the end of the year. The carrier lost 504,000 postpaid customers during the quarter, including the loss of 507,000 customers on its iDEN network and the gain of 3,000 customers – including the transfer of 93,000 iDEN customers – to its CDMA network. Sprint Nextel noted the customer gains on its CDMA network was the first in six quarters.
On the prepaid side Sprint Nextel said it added 483,500 subscribers to its iDEN network offered through its Boost Mobile subsidiary that was offset by the loss of 48,500 CDMA subscribers and the loss of 79,000 customers through its mobile virtual network operator partners. Sprint Nextel recently added CDMA devices to its Boost Mobile operations in hopes of providing more attractive devices, broader coverage and a faster data network to its prepaid offering.
Sprint Nextel’s customer losses put further distance between itself and its larger rivals Verizon Wireless, which added 2.2 million customers, and AT&T Mobility, which added 2.7 million customers during the quarter. Verizon Wireless ended the year with 91.2 million total customers, while AT&T Mobility counted 85.1 million. No. 4 operator T-Mobile USA Inc. is scheduled to release fourth quarter results later this month.
Customer churn improved for both its prepaid and postpaid operations, dropping from 8.2% to 5.56% year-over-year on the prepaid side and from 2.16% to 2.11% on the postpaid side. Postpaid average revenue per user dropped $1 year-over-year from $56 during the fourth quarter of 2008 to $55 in 2009, while prepaid ARPU was up $1 to $31. Data services contributed $16.75 per user to ARPU during the quarter, with CDMA customers posting more than $19.50 in data revenues or more than 35% of total CDMA ARPU.
Sprint Nextel said it expects to continue to lose postpaid and total customers through 2010, but that those numbers will be an improvement compared with 2009 results. The carrier also expects to increase capital expenditures to around $2 billion for 2010 and to continue generating free cash flow for the year.