Sprint is the Biggest Loser in Q2, Looks Forward to SoftBank-Driven Recovery
July 30, 2013 10:33 AM
Nextel network closure triggered bigger-than-expected subscriber, fiscal loss
Japan's SoftBank Corp. (
bought a "fixer-upper" in Sprint
Nextel Corp. (
In Q2 2013, Sprint was the only major U.S. carrier to
. Verizon Wireless
scored 941,000 new monthly subscribers
, AT&T, Inc. (
) tacked on 551,000, and Deutsche Telekom AG's (
) T-Mobile USA brand saw its first growth in three years, tacking on
a modest 3,000 customers
Sprint, meanwhile, shed 1.05 million subscribers during Q2. This was even worse than an analyst expectation of 872,000 defections,
of the ten analysts surveyed by
Financials also were full of misses. Sprint saw a net loss of $1.6B USD ($0.53 USD/share), versus an analyst expectation of $936M USD ($0.31 USD/share). The lone signs of hope lay in revenue; Sprint reported average (monthly) revenue per user (ARPU) of $64.20 USD. This was up nearly a dollar from a year before, and handily beat the
analyst estimate of $63.69 USD. As a result, Sprint's revenue of $8.88B USD, also broke through analysts' $8.73B USD target.
A key driver of Sprint's customers and fiscal launches, was the final shuttering of the decrepit Nextel network. Sprint did manage to "recapture" 4 million Nextel subscribers, a 44 percent recovery rate.
Sprint and Nextel : Not together anymore. [Image Source: Bloomberg]
The good news for Sprint is that it now has a lot of spectrum thanks to the closure of Nextel and
purchase of ClearWire
. And it has fresh leadership thanks to its new owner SoftBank.
By contrast SoftBank, who paid $21.6B USD for
a 78 percent stake in the third-place U.S. carrier
, pulled in ¥238.3B ($2.4B USD) in profit, after adding 810,500 net subscribers -- the most of any Japanese carrier. That profit beat analyst expectations of ¥198B ($2.0B USD).
The Japanese carrier expects to save $2B USD annually by pooling equipment purchases with Sprint to get a "bulk discount" of sorts. Those savings are expected to offset Sprint's losses during the recovery effort. SoftBank CEO Masayoshi Son remarks, "I expect Sprint would make a V-shaped recovery at an early stage."
Softbank CEO Masayoshi Son (left) and Sprint CEO Dan Hesse [Image Source: Kyoto Newscom]
Sprint ended the quarter with approximately 55 million subscribers, compared to 34 million for T-Mobile USA. Sprint is aiming to
aggressively roll out its 4G LTE network
, with the help of a $5B USD cash injection from SoftBank.
In terms of marketing Sprint remains the only carrier who does not throttle or charge users after hitting a connection cap. (T-Mobile slows the connection, but does not charge extra, while Verizon and AT&T charge overages). However, T-Mobile USA stole much of the spotlight with its affordable "JUMP" program, which allows you to
upgrade your smartphone every 6 months
for a modest fee.
and Verizon have since followed in suit with similar (if
a bit less attractive
) programs, leaving Sprint the odd man out.
"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
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