Sprint’s operational challenges continued through the first quarter of this year as the nation’s No. 3 operator continued to bleed customers while its financial position showed improvement.
On the customer side, Sprint said it lost a total of 467,000 customers during the quarter, which was a bit more than the 415,000 subscribers it lost during the first quarter of 2013, but more disappointing a significant drop from the 477,000 customers added during the final three months of last year. Sprint ended the latest quarter with nearly 54.9 million total connections on its network.
Breaking down its customer results, Sprint said it lost 595,000 direct subscribers to its service, including 231,000 postpaid customers and 363,000 prepaid customers. Those numbers also include 516,000 tablet net additions, which points to even heavier losses from higher revenue generating smartphone connections. The only customer segment to post a gain was through its wholesale and affiliate services, which added 212,000 customers during the first quarter.
Impacting customer growth was an increase in churn, with postpaid churn rising from 2.09% to 2.18% year-over-year, while prepaid churn surged from 3.26% in 2013 to 4.35% this year. The prepaid increase was attributed in part to re-certification of customers using its Assurance offering, which acts as part of the government’s subsidized Lifeline program.
Sprint’s customer retention efforts have been impacted over the past several years by network issues, including the turn down last year of its iDEN network and the ongoing Network Vision program that has seen the carrier basically replace all of its legacy network equipment. That program has resulted in considerable service disruptions across a number of markets. Sprint has said that in markets where it has completed at least 70% of its network upgrades, customer churn begins to stabilize and eventually subside. Going forward, Sprint’s management said it expects to post churn improvements during the second half of this year along with postpaid net additions.
Sprint did manage to grow average revenue per user year-over-year, though results dipped sequentially. Postpaid ARPU during the first quarter came in at $62.98, down 46 cents sequentially, but up 51 cents year-over-year; while prepaid ARPU was at $27.07, down 27 cents sequentially, but up 99 cents year-over-year.
Despite the customer challenges, Sprint managed to grow consolidated revenues year-over-year from $8.793 billion in 2013 to $8.875 billion this year, though results were down from the $9.142 billion posted during the fourth quarter of last year. Thanks to some prudent cost cutting, Sprint managed to slash net losses from $652 million during the first quarter of last year to $151 million this year. Some of those cost savings looked to have come from capital expenses, with Sprint reporting just $930 million in wireless capex spending during the first quarter, which was nearly half the $1.7 billion spent during the first quarter of last year.
On the wireless side, revenues increased 2% year-over-year to $8.254 billion, while operating income surged from $2 million last year to $490 million this year. Sprint also reported an increase in adjusted earnings before interest, taxes, depreciation and amortization from $1.4 billion last year to more than $1.8 billion this year.
Investors seemed buoyed on the news, with Sprint’s stock (S) surging more than 6% early Tuesday to $7.90 per share.
Bored? Why not follow me on Twitter?
