The move comes less than a month after the carrier set up its wholesale IP exchange and not long after it started selling wholesale cable VoIP services. That’s important because Sprint blamed the cutbacks, in part, on lack of growth from operator customers including cable MSOs.
Sprint’s wholesale unit typically is among its most profitable divisions. The carrier’s latest earnings report, however, showed just how much the business is suffering as Sprint combats the recession and, yes, the lingering repercussions of the Nextel takeover.
Wholesale, affiliate and similar revenue fell 41 percent in the third quarter as compared to the year-ago period, according to Sprint’s Oct. 29 earnings release. Sprint pinned part of the decline on subscriber losses “from one of our large carrier customers.” That would be Qwest Communications International Inc., which finished moving its wireless customers off the Sprint network and over to Verizon Communications Inc.
Also to blame, said Sprint, was the net loss of 410,000 net wholesale and affiliate users. That happened because MVNO partners lost subscribers and because Sprint deactivated open machine-to-machine devices “that had been activated in the second quarter but may not be utilized,” the company said in its earnings report.
Certainly that’s an interesting reason, as Sprint CEO Dan Hesse said just last month his company will find more and more of its revenue in machine-to-machine, or M2M, opportunities. In fact, a Sprint spokeswoman on Tuesday told The Associated Press that providing networks for devices such as e-readers – in other words, pursuing M2M – promises some of the best growth for Sprint.
Indeed, revenue from the burgeoning M2M market is projected to soar 250 percent by 2013, Hesse said at the recent COMPTEL PLUS Conference & Expo in Orlando. Sprint, he added, expects to lead its peers in the M2M arena, which ranges from smart grid initiatives to vehicles to e-books. Sprint’s current M2M partners include Ford Motor Co.
Nonetheless, Sprint is making good on those wholesale layoffs, even though M2M opportunities fall within the unit’s realm of expertise. Most of the firings will come in the traditional wireline and Internet telephone operations, a spokeswoman told AP. The representative would not say how many people will lose their jobs but did say less than 100 of the 575 workers in the wholesale business would be impacted. Sprint, the third-largest wireless provider in the United States, employs 42,000 people.
Sprint stocks had not traded since Tuesday. The price on Wednesday remained at $2.94 about two hours before Wall Street’s close.