Sprint Posts $594 Million Loss But Sees Signs of Progress
By Mark Long / Mobile Tech Today. Updated May 05, 2009.
Sprint Nextel posted a $594 million loss in the first quarter -- substantially higher than the $505 million loss the nation's third-largest wireless carrier recorded in the final three months of 2008. The company also said revenue fell 12 percent to $8.2 billion.
Still, Sprint Nextel CEO Dan Hesse told investors that he sees signs of progress in the first-quarter results. "We achieved the largest sequential improvement in overall gross adds and net adds in Sprint Nextel history, reduced churn versus the prior year, and we generated more than enough cash in this quarter alone to pay all of our 2009 debt maturities," Hesse said.
Targeting Customer Satisfaction
Hess noted that challenging economic conditions have led to a new market dynamic in which there were as many prepaid as postpaid customer decisions in the U.S. during the quarter. He also thinks it's entirely possible that the prepaid share of the total market could increase in future quarters.
Sprint is benefiting from the trend, Hess said, through its February launch of a flat-rate prepaid plan that offers unlimited nationwide voice, text and multimedia messaging, Web and push-to-talk connectivity for just $50 per month.
"We are very encouraged by the success of the Boost Unlimited prepaid offer which we launched on the iDEN network," said Hesse. "It has been a very long time since we've reported the number of iDEN network subscribers actually increasing."
Sprint lost 1.25 million contract or postpaid customers in the first quarter and Hesse said the company needs to do better. However, Sprint's rate of subscriber defections to other carriers slowed from 1.27 million in the final three months of 2008 to just 182,000 subscribers in the first quarter, driven in major part by consumer uptake to the new Boost Unlimited plan.
Aiming For Business
Sprint's investments in customer care since Hesse became chief executive also are starting to pay off. "The portion of customers that gave us the lowest possible rating -- those most susceptible to churning for service-related reasons -- reached an all-time low, declining by 45 percent year over year," Hesse said.
Because of the significant reduction in the number of calls to customer care, Sprint was able to discontinue the use of six additional vendor-operated call centers during the first quarter alone. "Due to improved operating performance, we have been able to eliminate a total of 17 vendor-operated call centers during the last 12 months," Hesse added.
On the downside, the deactivation of business lines slightly increased Sprint's postpaid turnover or churn to 2.25 percent in the first quarter versus 2.16 percent in the final three months of 2008. "The consumer side has been quite resilient in this economy, but businesses" are dealing with "layoffs, which means fewer devices, and companies are going out of business," Hesse said.
Sprint hopes to gain more business users through Tuesday's launch of the BlackBerry Mobile Voice System, which integrates the functions of a desk phone with a BlackBerry smartphone, Wi-Fi support, and push-to-talk capabilities over Sprint's iDEN network. The goal is to enable mobile employees to become accessible from virtually anywhere, the company said.
Sprint also is betting that its exclusive introduction of the Palm Pre in the quarter currently under way will help to counter further consumer defections.
"We are hopeful that with the foundation we are laying with strong network performance and customer-service improvements that the Palm Pre and a variety of other initiatives we have planned will get traction later in the year," Hesse said.