Sprint Narrows Q1 Loss; CEO Continues Attack on AT&T/T-Mobile Merger
Sprint Nextel posted a Q1 loss of $439 million, cutting its losses nearly in half from the same period of last year. During an earnings call Thursday, CEO Dan Hesse continued his sharp criticism of the AT&T/T-Mobile merger, claiming a strong third competitor is necessary.
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The combined company and Verizon would control about 70 percent of the wireless market, leaving Sprint a distant third, Hesse said. The industry is much better off by having a strong third player, he said. The combination would probably lead to higher, more stable prices and thus better profits in the industry, but more attention should be on what diminished competition would do, he said. Sprint’s push to expand WiMAX has helped the U.S. regain its wireless innovation lead, he claimed. If Sprint had not been a competitive player, the U.S. would still be a wireless also-ran, he said. Sprint is pro-competitive and the U.S. needs an innovative, vibrant wireless industry, he said.
The carrier added more than 1.1 million customers in Q1, its best net additions figure in five years. But it also lost 114,000 postpaid subscribers. Hesse said the company still managed to whittle down the figure from Q1 2010, while facing now two competitors offering Apple’s iPhone. Still, iPhone continues to be a threat, he acknowledged. The carrier ended the quarter with some 51 million wireless customers, including 33 million postpaid subscribers, 13.1 million prepaid subscribers, and some 4.9 million wholesale and affiliate subscribers.
The carrier had its lowest postpaid churn of 1.81 percent during the quarter as it launched its third 4G smartphone and announced the upcoming 4G tablets from RIM and HTC, bringing its total announced 4G devices to 22. If churn continues to improve, the carrier would be able to grow postpaid subscribers, Jonathan Chaplin with Credit Suisse said. “The jury is still out on the financial engineering,” said Bernstein Research’s Craig Moffett. But “on virtually all key metrics, Sprint’s results were better than we expected. Most importantly, Sprint is growing again, with subscribers and ARPU both rising, and this time without sacrificing margins,” he said.