Unfortunately, Sprint surprised few in the analyst community with its third quarter financial results that showed the carrier may be the Q3 source for customer gains at its rivals and the continued impact of its iDEN shutdown.
The nation’s No. 3 carrier said it lost a total of 313,000 customers from its network during the third quarter, which in the end were significant improvements compared with the loss of more than two million customers during the previous quarter tied to the shutdown of its iDEN network, and the 423,000 customers it lost during the third quarter of last year. Sprint ended the third quarter with nearly 54.9 million customers on its network.
Breaking down the losses showed most of the defections came from Sprint’s direct postpaid customer base, which are typically seen as the most profitable customers for a carrier. Sprint lost 360,000 of those subscribers, reversing previous gains it was seeing across the segment. Analysts were expecting the carrier to post a loss of between 300,000 and 400,000 postpaid customers during the quarter.
Sprint added that it sold five million smartphones during the quarter, including 1.4 million Apple iPhones, with 40% of those going to new customers.
Sprint’s prepaid channels and wholesale partners managed to add 265,000 customers to the carrier’s network during the third quarter, which was a significant sequential turn around, but well short of Q3 2012 results.
Sprint also lost 218,000 customers through a pair of recently closed acquisitions with U.S. Cellular and Clearwire that it was unable to get to re-sign with the carrier. Those losses included 175,000 postpaid and 56,000 prepaid customers, while it did manage to convert 13,000 wholesale connections.
Sprint rivals Verizon Wireless and AT&T Mobility have already posted solid Q3 results showing overall growth with varying degrees of success across different customer segments. Analysts also expect T-Mobile US to post continued customer gains for the third quarter after having out-gained its larger rivals during the second quarter.
Sprint’s postpaid customer churn remained steady year-over-year at 2.09%, while prepaid churn increased from 3.37% in 2012 to 3.78% this year. Postpaid average revenue per user came in below expectations at $63.69, though it was up from the $61.18 posted last year, while prepaid ARPU was at $26.04, down from $26.77 last year.
Wireless revenues remained flat year-over-year at just over $8 billion, while operating expenses continued to also grow resulting in a net operating loss of $355 million for the latest quarter. Capital expenditures contributed to the increased expenses, with Sprint pushing its capex spend to nearly $1.7 billion for the quarter. That metric is expected to continue to increase as Sprint ramps up its LTE network deployment and begins to fold in its 2.5 GHz spectrum holdings.
Sprint said it added 6,000 more cell sites to its Network Vision upgrade program during the quarter, bringing the total number of converted sites to 26,000. The carrier said it remained on track to have 200 million potential customers covered with LTE services by the end of this year.
Sprint’s stock (S) was trading down slightly early Wednesday at around $6.63 per share.
Check back with RCR Wireless News later today for more insight into Sprint’s Q3 performance.
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