Sprint's LTE rollout continues to move ahead and its wireless platform set a revenue record

There's been a lot of shakeup in the cellular market between Verizon Communications Inc.'s (VZbuyout of Vodafone Plc.'s (LON:VOD) stake in Verizon Wireless for $130B USDthe merger of German telecom firm Deutsche Telekom AG's (ETR:DTE) T-Mobile USA brand with MetroPCS, and Japan's Softbank Corp. (TYO:9984$21.6B USD acquisition of Sprint Corp. (S), and Sprint's subsequent ~$1.8B USD ($5.00 USD/share) buyout of Clearwire.

I. Mixed Results in Q3 For Sprint

While America's fourth largest carrier -- T-Mobile USA -- saw a prompt return to profitability following its MetroPCS merger and posted net subscriber additions in Q2, Sprint's turnaround has been a slower process.

In Q3 2013, its first quarter reporting income [PDF] under Softbank's umbrella, Sprint lost 360,000 post-paid subscribers, and added 84,000 prepaid subscribers.  Due to the June closure of Sprint's IDen network, used primarily by business customers, Sprint saw a net lost of 313,000 customers across its post-paid and pre-paid brands.

While T-Mobile has yet to report its Q3 results (and will do so Nov. 5), Sprint's losses stack up unfavorable compared to rivals Verizon Wireless and AT&T, Inc. (T), America's first and second place carriers, respectively.  Verizon Wireless added 927,000 new subscribers in Q3, while AT&T tacked on 363,000.

Sprint sign
Sprint continues to bleed customers. [Image Source: Lisa Poole/AP]

As the Softbank deal and Clearwire acquisition only wrapped up midway through Q3, it may be too early to say how the pairing of the highly successful Japanese carrier, with the struggling American carrier is stacking up.

Sprint reported mixed results for its average revenue per user (ARPU).  ARPU among postpaid (contract) customers was up on a quarter-to-quarter basis, but prepaid ARPU fell.  Wireless revenue did set a record of $7.3B USD, a bright spot on the earnings report and the Sprint brand revenue rose to $5.8B USD.  However, the company's total net revenue (including wireline and revenue from other Sprint-owned brands) fell 2 percent to $8.68B USD.

Sprint reversed its net loss from ($1.6B USD) last quarter to a net profit of $383M USD this quarter. The company saw an operating loss of ($398M USD), which was down from last quarter's loss, but up from the amount Sprint lost a year ago.

II. Signs of Progress

Sprint's LTE network continues to slowly expand.  It currently covers 230 markets, and Sprint intends to cover 200 million Americans by the end of 2013 -- roughly two-thirds of Americans.

The launch of the Apple, Inc. (AAPL) iPhone 5S was a major event for Sprint in Q3.  Sprint sold a modest 1.4 million iPhones (inc. the budget 5C and older models).  By contrast Verizon Wireless sold 3.9 million iPhones.  (AT&T did not disclose its iPhone sales in its earnings report.)
Sprint sold 1.4 million iPhones in Q3.

Overall, 92 percent of its postpaid branded customers chose smartphones over feature phones, showing that the smartphone has almost completed its displacement of the feature phone in the U.S.

Sprint CEO Dan Hesse focused on the positive notes of the earnings report -- the 4G LTE rollout and the record platform revenue, stating, "During the third quarter Sprint platform postpaid service revenue and ARPU once again hit record levels and we continue to make great strides in our 4G LTE rollout.  We expect our network investments will bring customers greater speeds and capacity and, when combined with our unique unlimited for life offers, will improve our competitive

Sprint and Softbank
Softbank CEO Masayoshi Son (left) and Sprint CEO Dan Hesse [Image Source: Kyoto Newscom]

Look ahead, Sprint is warning of more customer defections, however, it's focusing on returning to profitability with the help of cash infusions from its parent Softbank.

Source: Sprint

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