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Sprint Nextel posts rough Q4, $1.3B net loss

Sprint Nextel continued to confound the market, announcing fourth quarter and full-year 2012 results that while disappointing from an absolute perspective, managed to come in better than many had expected.

Sprint Nextel said it lost 337,000 customers during the final three months of 2012, which included the loss of 243,000 customers from its postpaid offerings, 243,000 customers lost through its wholesale and affiliates and a gain of 149,000 customers through its various prepaid channels. This was a significant drop from the 1.6 million net customer additions posted during the fourth quarter of 2011, but was better than analysts expected.

Continuing to drag on the carrier’s customer numbers was its iDEN operations, which Sprint Nextel is in the process of decommissioning. That network lost more than one million customers during the fourth quarter, though Sprint Nextel did note that it was able to “re-capture” around 50% of churning iDEN customers.

Sprint Nextel ended the year with 55.6 million total customers, with just two million continuing to reside on its iDEN network. Sprint Nextel is looking to free up spectrum in the 800 MHz band currently supporting the iDEN network to deploy CDMA voice services as well as said it will begin using that band to support LTE services by the end of the year.

Sprint Nextel’s customer losses came in slightly better than analysts were forecasting, but continue to pale in comparison to larger rivals. Verizon Wireless noted last month that it added more than 2.1 million postpaid customers during the fourth quarter, while AT&T Mobility said it added more than 700,000 contract subscribers during the quarter.

Customer churn during the quarter was mixed as postpaid churn increased from 1.98% during the fourth quarter of 2011 to 2.18% in 2012, while prepaid churn dropped from 3.68% in 2011 to 3.3% last year.

While Sprint Nextel continues to struggle in keeping customers, those that do stay are spending more each month. The carrier noted that postpaid average revenue per user surged $2.88 year-over-year to $61.47, while prepaid ARPU increased 7 cents to $26.69.

This growth – along with approximately 600,000 more customers on its network – helped propel total revenues, which increased from $7.9 billion during the fourth quarter of 2011 to nearly $8.3 billion in 2012. Full-year revenues increased more than $2 billion to $32.3 billion in 2012.

Those revenue gains were offset by increased operating costs that increased more than $600 million for the fourth quarter to $9 billion, and nearly $4 billion for the year to $34.4 billion. This helped push Sprint Nextel’s total net losses up slightly during the quarter to $1.321 billion, while full-year net losses came in at $4.3 billion.

Those expenses could continue throughout the year as Sprint Nextel said it expects to continue pouring additional funding into its Network Vision upgrades. The carrier said it spent $1.9 billion on capital expenditures during the fourth quarter of 2012, and plans to spend a similar amount per quarter through the first half of this year. This spending spree should see the carrier have approximately 12,000 cell sites upgraded by the end of the first quarter and expand its LTE coverage to nearly 200 million potential customers by the end of 2013.

Sprint Nextel’s stock (S) was trading down just over 1% early Thursday.

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