Sprint Losses Climb on Postpaid Sub Defections

Sprint Nextel Corp. (S) continues to lose high-dollar postpaid subscribers, but it’s making strides among prepaid customers.

That small bright spot, though, wasn’t enough to keep Sprint’s second-quarter earnings from disappointing investors. The Kansas-based wireless service provider lost $384 million, or 13 cents per share, compared to losses of $344 million, or 12 cents per share, during the same period a year earlier. Sales dropped, too, to $8.14 billion, a slide of about 10 percent. Analysts polled by wire service Reuters had expected losses of 2 cents per share on sales of $8.13 billion.

Postpaid subscriber defections largely were to blame for the drab numbers. Approximately 991,000 long-term contract customers switched to other carriers during the second quarter. Still, Sprint executives remain somewhat optimistic because those losses didn’t reach first-quarter totals of 1.25 million.

Those execs also are looking to prepaid demand to help reverse fortunes at the struggling company. Sprint operates the Boost Mobile brand and said it added 938,000 new users to the service in the three-month period ending June 30. Indeed, Sprint plans to capitalize on the growing popularity of prepaid plans and devices – yesterday the carrier announced a $483 million takeover of MVNO Virgin Mobile USA.

Nonetheless, margins disappointed observers, who said cuts including layoffs and call-center closings should have pushed profitability past the 21.7 percent Sprint reported. Analysts had expected the Palm Pre to boost margins, but problems with supply hurt Sprint’s efforts to compete with the iPhone and BlackBerry.


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