Sprint Corp. surpassed most estimates by posting 518,000 net direct customer additions during the first quarter of this year, ending the quarter with more than 18.3 million direct subscribers on its network. Analysts were expecting the carrier to post around 400,000 direct subscriber additions during the quarter, which would have been in line with the 414,000 customers the carrier added during the first quarter of 2004.
Sprint’s wholesale and network affiliates contributed another 787,000 net customer additions during the first quarter, pushing the carrier’s total customer additions up 34 percent year-over-year to 1.3 million total net subscriber additions. The wholesale customer growth included approximately 200,000 subscribers transferred from Qwest Communications International Inc., which completed the transfer of approximately 800,000 Qwest’s wireless customers to Sprint’s network. Sprint ended the first quarter with 26 million total customers on its network, including 4.3 million wholesale customers and 3.4 million subscribers from its affiliates.
The carrier’s strong direct customer growth was boosted by a drop in customer churn from 2.9 percent during the first quarter of 2004 to 2.5 percent this year, which more than offset a modest 2.6-percent increase in gross subscriber additions.
Average revenue per user remained stable at $61 due to an increase in data revenues offsetting declines in voice revenues. Sprint noted that data services contributed $6 or 10 percent in ARPU during the quarter and that 8 million customers subscribed to data services. The carrier also reported that it had 600,000 subscribers to its ReadyLink push-to-talk service at the end of the quarter.
Total wireless revenues increased 12.5 percent year-over-year from $3.4 billion during the first quarter of 2004 to $3.9 billion this year, despite a 13-percent drop in equipment revenues to $328 million. The carrier noted the decline in equipment revenues was due to more handsets sold at lower price points.
Operating income surged more than 64 percent from $277 million during the first quarter of 2004 to $455 million this year, while capital expenditures increased 3 percent from $406 million last year to $418 million this year. Sprint’s management noted that the carrier spent $140 million during the first quarter-and $300 million to date-on its CDMA2000 1x EV-DO network that will launch on a market-by-market basis later this year.
The carrier said it planned to spend around $1 billion on its EV-DO deployment with plans to cover 130 million potential customers by the end of this year and 150 million pops by the middle of 2006. The carrier added that it did not expect the EV-DO service to compete against traditional broadband offerings, but that its technology plans for the 2.5 GHz spectrum it currently controls and will acquire when it merges with Nextel Communications Inc. could prove a compelling alternative.
