Sprint continued to lose wireless customers during Q109, though at a slower rate. While Sprint’s overall subscriber count only declined by 182,000 from the end of 2008, its post paid subscriber count, the most profitable subscriber segment, decreased by 1.25 million. Sprint offset those heavy losses by adding 764,000 prepaid Boost Mobile subscribers and 394,000 wholesale subscribers. Sprint Nextel’s wireless customer base totaled 49.1 million as of quarter-end as compared to 49.3 million at the end of 2008. The former includes 35.4 million post-paid, 4.3 million prepaid and 9.4 million wholesale and affiliate subscribers. Sprint is planning to launch the Palm Pre sometime this quarter, which it hopes will help stem the tide of post paid wireless defections.
The growth engine for wireless these days is data. For Sprint, data revenues contributed greater than $15 to overall post-paid ARPU in the first quarter. CDMA data ARPU increased about 5% from the fourth quarter, to greater than $18. Sprint claims their data ARPU is an industry-best and represents more than 31% of total ARPU for their CDMA customers.
On the financial side, Sprint reported a net loss of $594 million ($0.21 per share) for this year’s first quarter as compared to a $505 million ($0.18 per share) net loss in Q1 a year ago. Overall, consolidated net operating revenues came in at $8.21 billion, down from $9.334 billion a year ago. Capital expenditures were down sharply year-over-over, from $1.36 billion in Q1 ’08 to $291 million this year. Net debt was reduced by some $800 million as of end Q4, to $17.1 billion. Free cash flow was concomitantly higher–$796 million in Q1 ’09 versus $170 million in the year-ago first quarter.
CEO Dan Hesse accentuated the positive, which included improving and stabilizing the company’s financial position, improving customer service and rebuilding the Sprint Nextel brand. “We achieved the largest sequential improvement in overall gross adds and net adds in Sprint Nextel history, reduced churn versus the prior year, and we generated more than enough cash in this quarter alone to pay all of our 2009 debt maturities,” he stated in a media release.
We often forget that Sprint does still have respectable wireline operations and provides much of the IP voice capability for tier 2/3 cable providers. Some 4.6 million cable partner subscribers were making use of Sprint’s VoIP services as of the end of Q1. For the wireline business, revenues fell almost 4% sequentially and 10% year-to-year to $1.5 billion as increased Internet revenue growth didn’t make up for declines in legacy voice and data. Internet revenues rose 16% year-to-year and 2% sequentially off the back of strong enterprise demand for MPLS services and an increasing base of cable subscribers using the company’s VoIP services. Q1 Internet revenues accounted for 39% of total wireline revenues as compared to 30% in Q1 last year.
