Sprint has tried to stay competitive through a variety of methods. It released new smartphones and sought to expand its wireless offerings. However, despite its best efforts, the nation's third largest carrier lost more ground to it larger competitors, AT&T and Verizon, in Q1 2008.
The traditional Sprint network and the Nextel division of Sprint -- the mobile phone network which it acquired for $35 billion in 2005 -- currently have 52.8 million subscribers after losing over 1.1 million customers during the quarter. The lost customers are "post-paid" customers, meaning customers who usually pay a monthly bill. The loss indicates growing trouble. In all of 2007, Sprint only lost 1.2 million customers, but steep losses began in Q4 2007, with the departure of 1.07 million customers.
These losses are particularly notable as Sprint has various severance penalties to try to dissuade customers from leaving. The large customer exodus indicates that customers are willing to pay the price to ditch Sprint, a very bad sign for the carrier.
As a result of the losses, Sprint saw its revenue fall 7.5 percent to $9.33B USD. In all the company lost $505M USD over the quarter, up from a $202M USD loss the year prior.
The losses have Sprint reeling. CEO Dan Hesse refused to comment on rumors that Sprint may dump Nextel to focus on its own cell phone network. He did say that such a move would involve "significant complexities".
The merger has been a painful process for Sprint, and has gone rather poorly. Nextel has been blasted by customers for its poor service quality, among the reason many are switching. Also it notoriously cancelled over a thousand customers last year who were too "needy", which they described as calling customer service too many times. Many customers have also griped that Nextel's network provides poor handset choices compared to Verizon, or AT&T, which offers the popular iPhone.
Now losing 2.45 percent of its customers per quarter, a new high "churn rate", Sprint is likely to start to make bigger moves to try to stay afloat. And meanwhile it can only stare resentfully at its rivals. AT&T gained 1.3 million subscribers during Q1 2008, while Verizon gained 1.5 million. It appears Sprint's loss is truly its competitor's gain.
Hesse remained optimistic despite the bad news, reiterating his prior stance that the company would need several quarters to recover. He stated rosily that he saw "improved profitability in the long term" based on the current results. He also pointed to the new "Simply Everything" plan which offered unlimited voice, data, text messaging, and Web surfing for $99.99 a month as an example of a promising development.
Still with its hemorrhaging of customers and piling financial losses the outlook is not necessarily so bright for Sprint, if it doesn't make big changes. The results are already being felt -- early this year Sprint announced that it was laying of 4,000 workers and closing 8 percent of its stores. Additionally its CFO, CMO, and one of its division Presidents were ousted.