Sprint Nextel posts robust Q4 results

Sprint Nextel Corp. (S) appeared to continue making progress on turning around its beleaguered operations during the final three months of 2010. The carrier said it added 1.1 million new customers to its network during the quarter, its strongest growth in nearly five years and enough to garner accolades from investors.
The carrier said its fourth quarter growth included 704,000 net customer additions through its retail offerings and 393,000 customers added through affiliates and network partners. The retail growth was propelled by Sprint Nextel’s plethora of prepaid offerings, which contributed 646,000 customers during the quarter, while its postpaid services added 58,000 new subscribers. Those results were well ahead of the 148,000 customers the carrier lost during the fourth quarter of 2009.
As has been the case since Sprint Corp. acquired Nextel Communications Inc., the carrier’s iDEN network continued to bleed subscribers nearly to the detriment of its overall growth. On the prepaid side Sprint Nextel said it added 1.4 million customers to its CDMA network, while the iDEN operations, which are sold through its Boost Mobile offering, lost 768,000 subscribers.
On the postpaid side, the carrier’s gain of 453,000 CDMA-based customers was nearly offset by the loss of 393,000 customers from its iDEN-only service. The carrier noted that its dual-network PowerSource offering lost 66,000 customers during the quarter and was included in its CDMA results.
All of its affiliate and network partner customers were added to the carrier’s CDMA network.
Sprint Nextel noted late last year that it planned to begin turning down its iDEN operations beginning in 2013.
In addition to posting strong results in relation to its previous efforts, Sprint Nextel managed to remain in the conversation when compared with growth posted by at least one of its larger rivals. Verizon Wireless said it added just over 1.1 million new “connections” to its network during the quarter made up mostly of lucrative postpaid customers. On the other hand, AT&T Mobility said it added 2.8 million “connections” to its network that included a majority coming from non-traditional devices and resellers.
Beyond the customer growth results, Sprint Nextel reported strong improvements in customer retention as its postpaid churn dropped from 2.11% during the fourth quarter of 2009 to 1.86% in 2010. Prepaid churn also improved from 5.56% in 2009 to 4.93% last year.
Financially, Sprint Nextel noted that postpaid average revenues per user remained flat year-over-year at $55, while prepaid ARPU dipped from $31 to $28 during the fourth quarter.
Overall revenues increased nearly 8% for the quarter from $6.8 billion in 2009 to $7.36 billion last year. Full year revenues increased just under 3% from $27.8 billion in 2009 to $28.6 billion last year.
The revenue growth combined with flat costs helped improve Sprint Nextel’s operating losses, which climb from a loss of $635 million during the fourth quarter of 2009 to a loss of $267 million last year, while fill year losses improved from a loss of $1.955 billion in 2009 to a loss of $1.229 billion in 2010.
More importantly in the eye of investors, Sprint Nextel noted that free cash flow increased from $666 million during the fourth quarter of 2009 and $384 million during the third quarter of last year to $913 million during the final three months of the year. The news helped propel the carrier’s stock up more than 3% in early Thursday trading to $4.49 per share.