Sprint losses and customer defections continue
Updated 8:32 a.m. PDT with information from the conference call.
Sprint Nextel is still losing customers, the company said Thursday as it reported a third-quarter loss.
Sprint's losses widened to $478 million, or 17 cents a share, during the quarter that ended September 30, from a loss of $326 million, or 11 cents a share, a year earlier. Revenue fell nearly 9 percent to $8.04 billion.
Results were slightly worse than analysts had expected. Analysts had been looking for Sprint to report a loss of 15 cents per share on revenue of $8.09 billion.
Sprint continued to lose customers, as it has for several quarters. But it lost fewer customers than analysts had expected. Sprint lost a total of 801,000 subscribers in the quarter. Analysts had expected the company to lose 870,000 so-called post-paid customers.
Meanwhile, Sprint competitors AT&T and Verizon Wireless added 2 million and 1.2 million customers, respectively.
That said, Sprint lost fewer customers than it has in the past quarters of 2009. In the second quarter it lost 991,000 subscribers and in the first quarter it lost 1.25 million. And Sprint's CEO Dan Hesse said during the conference call that he saw even more improvement toward the end of the third quarter due to a new service plan called Any Mobile, Anytime. This plan, which starts at $69.99 per month, allows subscribers to call any cell phone in the U.S., regardless of the carrier. The plan also comes with Sprint's Simply Everything Data plan, which includes unlimited text messaging and data services. Subscribers also get 450 voice minutes for calls to landlines.
Sprint CEO Dan Hesse
(Credit: Sprint)Sprint's churn rate, or the rate at which customers dump its service, was 2.17 percent, up from 2.05 percent in the second quarter.
"We finished the quarter stronger than started it with the launch of Any Mobile, Anytime," Hesse said. "So the trajectory leaving the third quarter did improve. We are hoping that this will help us keep the base of people on our Simply Everything plans and get customers to migrate. So we think it will make a difference in churn."
Hesse explained that before Sprint launched its Simply Everything plans, which bundle, data and voice services into one flat price, its highest churn came from the customers who spent the most money every month. After it launched the Simply Everything plan, it reduced churn of these valuable customers. And now the highest churn rate are among customers who spend less money per month on services.
"We know these plans make a difference," he said. "And we are moving down the rate card, hoping to improve churn and our brand."
These new plans may help with reducing churn, but it hasn't helped the company grow average revenues per customer. In fact, customers with contracts spent on average $56 a month, about the same as they've spent for the last several quarters. Data revenue accounted for almost 30 percent of that.
Reducing churn is critical for Sprint, but Hesse also noted that it's important for the company to add new customers as well. In an effort to keep customers, Sprint has added a new touch-screen Google Android phone, the HTC Hero. And it will soon add another Google Android phone, the Samsung Moment to its line-up. It is also the exclusive carrier for the Palm Pre, at least until the end of 2009. It will add the Palm Pixi to its lineup later next month. And it has launched new BlackBerry devices, including the BlackBerry Tour.
Hesse said it is important for the company to have a strong lineup of phones to compete against rivals, such as AT&T and Verizon Wireless. But adding smartphones comes at a price. In order to make devices more affordable to consumers, Sprint said it paid about $950 million to subsidize equipment, which includes high-end smartphones. A year ago it spent $700 million on equipment subsidies.
'Doubling-down' on prepaid
"Competition is getting tougher among postpaid competitors as we all go after each other's base of customers for growth," he said. "But that is why we are also doubling down on our prepaid business. Because we think there is more growth there."
Indeed, Sprint did much better in the third quarter adding prepaid customers than it did adding new postpaid, contract customers. Much of this growth was helped by Sprint's Boost Mobile brand, which includes unlimited calls and texting for a $50 a month. Sprint added about 666,000 prepaid users.
Hesse said he expects the Virgin Mobile USA service, which Sprint acquired in July, to also help grow this business. The Virgin service uses Sprint's CDMA network, while Boost uses the company's iDEN network.
"We are looking to prepaid service as a potential growth engine," he said. "But still intend to get postpaid back to growth, and to do that we must focus on churn, but we also have to add customers. You can't win the game with just defense. You need to have a two-pronged attack."
But analysts and investors question this strategy. They worry that Sprint is becoming too dependent on prepaid customers, a business which has typically been less profitable than the postpaid market.
Hesse also said he was hopeful that the company's investment in 4G wireless will begin paying off in 2010 and beyond. The company has partnered with Clearwire to build a nationwide 4G wireless network using WiMax technology. The network is already up and running in 17 markets. And Sprint is offering a dual mode 3G/4G service that provides full nationwide coverage to wireless customers today.
"Another important area of growth is in 3G and 4G data," he said. "And I think the industry's best days are ahead."
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. 
Sprint should just acknowledge their crappy service and drop out already. They already ruined Nextel and their ads on TV take too long. Maybe 24 can get a different sponser after all.
I'll be happy to see Jack Bauer say, "I am calling you from the some other network", instead of saying "I am calling you from the Now network".
While it's true dead people don't often switch carriers, they do tend to be a bit late on paying their bills, so it's not a really important demographic for Sprint.
Of course it does sound great for Halloween:
"Sprint! Number one network for the undead!"
:-)
And yeah, Sprint sucks as their phones REALLY suck. Sure they got the Pre (finally) but it wasn't good enough to save them. They need an iphone. I mean, AT&T has crappy service but people still keep switching to them because of the iphone. The Pre didn't have the same gravitas.
Cody
I got the Pre a few months ago and while I like the phone the one complaint I have about it is at times the response time when I press to open an application there is a delay, now it doesn't happen all the time.
I will not be changing cell service again unless Sprint goes completely under which I don't think will happen.
Only complaint with the Pre has to do with wifi and their attempts at increasing battery life. It's basically just better to leave wifi off.
And here I really was going to go and jailbrake an iPhone... Oh well.
Keep Sprint and their closed phone system (CDMA) and their poor customer service. I'll stick with T-mobile. Now all I need is that Sony Ericsson "Rachel" X3 on T-mobile and I will REALLY be good!
T-Mobile has been excellent, the only time I have dropped calls is when I'm at the gym where I work and it's in the basement, I can deal with that.
There is a teaser ad for it , but it is for South America.
Force the phone makers to sell to the consumer. Let the consumers drive the market for the best phones, and maybe Sprint wont lose $950 million a year in subsidies. I wonder what my service would cost without that tag? You don't buy your TV through your cable company, do you?
No problems with Sprint service at all. Sprint on and off since 1998 !
Oh wait....it's you and you don't listen to sense or talk sense. You just spew out nonsense.
And trust me,,,Droid and all the other Android phones will add millions of customers to Verizon.
And it is supposed to go for only $99. That`s quite a second trick for the pony..in a very short time. (Droid Eris)
- by Brent212 October 29, 2009 2:56 PM PDT
- I live in the San Jose, CA area, and after using AT&T, T-Mobile, Cingular (which then became AT&T while I was still with them), and now I've been with Sprint for about a year and a half.
- Like this Reply to this comment
-
Showing 1 of 2 pages (43 Comments)For me, they definitely have the best coverage. I don't think I've ever had a call drop, and call quality is noticeably better than with any of my past carriers. Yeah, it could just be that I have a better phone, but I think it at least is partially because Sprint has better coverage in my area. There was even one time where I was at a gas station in a rural area towards Yosemite with a group of people, each of whom had non-Sprint phones (two AT&T, one Verizon), and I was the only one who had a signal. I was on the phone in the mini mart and the lady behind the counter asked me what carrier I had because she said most people couldn't make calls there.
With that said, I've never experienced worst customer service than when I was initially setting up my account/phone with Sprint. It was unbelievably bad. The service reps were absolutely useless, and the only time I ever got anything accomplished was when I'd tell them that I was over it and wanted to cancel. I'd then get transferred to cancellations and when the person would ask me why I was cancelling, I'd tell them what I was trying to do and that it apparently wasn't possible, and they'd say something along the lines of "well that's no problem! Let me go ahead and do that for you!" and BAM, it'd always work for them. That happened 3 or 4 times, during the countless hours I spent waiting for non-cancellations department tards who apparently had no more knowledge or capabilities than I did from looking at their website and viewing my account (Half the time I had to actually correct them or provide information that was clearly visible to me in my online account).
I like the coverage, although I never had extensive problems with any of my previous carriers. The main thing keeping me with Sprint is that I'm on a SERO plan, so the cost can't be beat. But all these new phones are pretty tempting, and it seems they've stopped allowing SERO customers to use the new phones. So with that in mind, I'll probably be jumping ship once my two year contract's up. Even if I can get a good phone from Sprint on one of their normal plans, I'd rather give my business to another carrier out of spite for them not allowing me to keep my current plan. If I'm not saving money, why would I stay with a company like that?