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Sprint loses another 1.3 million customers
UPDATE at 5:17 a.m. PST: Comments added from the company's conference call.
There was good news and bad news in Sprint Nextel's fourth-quarter earnings report on Thursday. But mostly it was bad.
First, the good news: Sprint narrowed its losses considerably, compared with a year earlier. For the fourth quarter, Sprint lost $1.62 billion, or 57 cents a share. This is certainly better than the $29.45 billion, or a whopping $10.36 a share, it lost during the fourth quarter of 2007. The previous year's losses were due to some large write-downs the company was forced to take related to its merger with Nextel. This time around, Sprint only had about $1 billion in write-downs.
Now for the bad news: Sprint is still losing customers. And as a result, its quarterly revenue declined about 14 percent to $8.43 billion.
Sprint, the third-largest wireless operator in the U.S., said it lost about 1.3 million subscribers during the fourth quarter. It now has about 49.3 million subscribers. The majority of the losses came from the highly coveted contract-customers, of which Sprint lost about 1.1 million.
Sprint's continued customer loss comes as bigger rivals AT&T and Verizon Wireless add customers. AT&T reported last month that it added 2.1 million subscribers during the fourth quarter, while Verizon Wireless added 1.4 million.
It should come as little surprise that Sprint's churn rate, or the rate at which customers ditch its service, was up slightly to 2.16 percent. The previous quarter it had been about 2.15 percent, much higher than its competitors.
Sprint has steadily been losing customers for the past several quarters as many former customers complain of poor customer service. Dan Hesse, who took over as CEO in 2007, has made big efforts to improve the company's image. He has even appeared in several of the company's TV commercials and in marketing materials. But the efforts seem to be making little difference as the company continues to shed subscribers.
Hesse said during the company's conference call with analysts and investors that the company's messages will take time to resonate with customers.
"Subscriber losses and revenue declines are still unacceptably high," he said. "But it takes time for perceptions about our customer care and financial stability to catch up to the reality."
And with the U.S. recession, there is even more pressure on Sprint to maintain its current customers and grow its base. The company's strategy right now seems to be to compete on value. Last year, it started offering a $99 Simply Everything plan that includes national calling, unlimited SMS/MMS, data, text, e-mail, and Web surfing. This week, it announced it is adding laptop 3G data service to the plan for an extra $50 a month.
The company's prepaid brand, Boost Mobile, has also been trying to win over customers who are looking to lower their cell phone bills. It recently started offering a $50 a month flat rate plan.
While AT&T and Verizon Wireless appear to be weathering the economic storm rather well, Sprint and T-Mobile USA, are struggling to win new customers and keep old ones from leaving.
Sprint has already said it will cut about 8,000 jobs. But the CEO has said the company will not lose workers who deal directly with customers since he is determined to improve the company's customer service.
Overall, Hesse said he is pleased with the company's progress as he and his team work toward improving the company's financial fundamentals and subscriber losses. He added that the economic downturn hasn't made his job of turning around Sprint any easier, but said the company is in a good position to weather the storm.
"In 2009, we expect both both post-paid and total subscriber losses to improve," he said. "And we will continue to generate free cash flow. I still believe the wireless industry is relatively well positioned in this weak economy."
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
This is not only false as a matter of law, but completely immoral and repugnant. Their attitude is basically "Screw you, sue us." I paid their early termination fee once because it wasn't enough money to be worth taking them to court, but will never again spend one time with Sprint or allow any business I work with to enter into a contract of any type with them if I have any choice in the matter.
Sprint's corporate culture is fundamentally one of dishonesty and screwing the customer out of every dime, and I cannot imagine anyone who has experienced their so-called "customer service" choosing to do business with them again.
That statement is a bald-faced lie. My daughter was working as a tech support person for Sprint, and she was just layed off with several other people at their Oklahoma City Call Center.
If this is what sprint considers value in these hard financial times, then they can stand to loose another 20 million customers- 150 bucks a month for what should be a 50 dollar, 70 dollar max service is appalling. cell companies are part of the stagnation of this country financially and technologically. while they fumble around trying to glean every dollar out of tech from six years ago, the consumer pays a premium for sub standard voice service and laughable data rates. Their greed has caused us to be (a) generation(s) behind in the cellular technology. This same MO is responsible for the destruction of many industries in this country. what a shame
Bring on the Palm Pre !!!
Customer service in the brick and mortar stores was not so great.
This just in...Sprint just lost 1.3 million customers in the 4th qtr ALONE! Meanwhile at&t and Verizon added 3.5 million combined. That's not good.
Verizon has better coverage, but if AT&T had a presence in South Dakota, I'd defect and buy an iPhone in a heartbeat.
kingtrae79, exactly.
If Sprint wants to earn back some customers, they need to undercut their competition on price and they need to offer better phones. Heck, maybe even get rid of the 2 year agreements and knock them back to just 1 year. Give me a $99 'Everything' plan that INCLUDES unlimited laptop tethering (or some very high limit, like 20GB/month), and something that works as simply and cleanly as an iPhone (compared to every other PDA/Phone on the market), and you'll win back this AT&T customer.
And another thing... Why not offer discounts to long-standing customers? Every other cell phone provider treats their existing customers poorly. It's the *new* customers that get free phones, better rate plans, etc. Sprint could really start something if they offered a 'loyalty' program where good customers would qualify for discounts on service or new phones. And advertise it. Make it a policy. You'd make your existing customer base much happier (less churn), and you'd get new customers. Customers who would be eager to 'join the club'.
I actually will give Sprint's CEO some credit on the commercials. I think they are tastefully done and I appreciate the honesty that they seem to convey. But what matters to consumers is cost.
And for everyone who complains about Sprint's customer service, yes it WAS bad. Recent studies have shown that Sprint's customer service is #1 over Tmobile, ATT and Verizon. The problem is that customer service of the past has put a stain on Sprint and its going to take time to reverse that.
Is the Palm Pre ever going to show up, or should I just get an iPhone. I think the iPhone will do everything that I use my laptop for on the road. If they legally tether iPhones, I am leaving Sprint.
With my discount, I have two phones, data, and unlimited texting. I spend between $100-110 month with fees. What do other people spend?
No, you probably didn't know that. There's going to be a Clearwire 4G chip in every laptop with Intel in it.
Unfortunately I went from Sprint to Nextel. I loved Nextel because my friends had it so the direct talk was great. But then the merge came along and my coverage went from excellent to crap. I love my T-Mobile now. No complaints at all! Although I am going to Verizon in a few months due to a discount I get through my employer.
"I spend $0. I got rid of Sprint a few months after they started charging for every Customer Support call . The only thing I liked about Sprint was my phone. That was back in the Motorola Star-tac days. Still my favorite phone of all time.
Unfortunately I went from Sprint to Nextel. I loved Nextel because my friends had it so the direct talk was great. But then the merge came along and my coverage went from excellent to crap. I love my T-Mobile now. No complaints at all! Although I am going to Verizon in a few months due to a discount I get through my employer.
uhm yeah, that's why their customers are leaving now.
Absolutely the worst customer service, greed driven.
Commercials don't sway people, service does.
Or maybe the disjoint from reality - they say it's better, it's not - so time to leave.
I liked AT&T Wireless back in those days. But with the release of the first gen iPhone I didn't like. Here is why.
It takes a wireless carrier an average of 13 months to begin to make a profit off a new customer. This is because of the discount in the phone, activation process, and marketing costs. This is why the require a 2 year contract. But with the iPhone 1st gen you were paying the full price of the phone...not discount...yet they still required a 2 year contract. I just think that was BS bigtime.
Just yesterday, I walk into one of the Denver Sprint stores (2nd and Milwaukee in Cherry Creek North) to get some information about my account. There are two Sprint reps standing outside smoking. No other customer is in the store, which is walled with glass, and thus the two smoking reps could easily to see that I was the only one in the store. I stood there, and stood there, while the two reps leisurely puffed away to the end of their smokes. I hope they enjoyed their smoke sticks.
- by globalist_agenda February 19, 2009 8:52 AM PST
- Who's doing the work of the 8,000? Let me get this straight. Sprint is axing 8,000 workers but customer service won't be affected? What WILL be affected? Engineering? Sales? Are the remaining workers going to puick up the slack? Will customer service have to work extra hours? Hesse's plan sounds as credible as Mao's Cultural Revolution. Furthermore, does he think that in this economy people can afford to spend $150 a month ($1800 / year + taxes)?
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- by jmc015 February 23, 2009 4:22 PM PST
- For unlimited minutes, messaging, picture mail, email, web surfing etc on your phone + an internet aircard for 150/mo.? Who will pay that much? Anyone who wants the cheapest price. Try finding that deal with ATT or Verizon.
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