DALLAS-Sprint Corp.’s strong growth across many of its operational and financial metrics during the past several years could be difficult for the carrier to maintain, according to a report released by consulting firm Alexander Resources.
The report claims to have examined and analyzed the inter-relationship of several operating and financial metrics in 58 different ways and differs from other equity and valuation reports as it focuses on how marketplace dynamics affect Sprint’s business and financials.
The report found that despite Sprint growing its subscriber base by 110 percent since June 2002, the carrier’s market share has remained flat. In addition, Sprint’s net operating revenue and service revenues per subscriber have steadily declined despite an increase in each metric on a dollar basis.
The report notes that Sprint’s service revenues have grown by 82 percent, but service revenues per hour of usage have declined, and that price erosion and competition have reduced service revenues by 19 percent. And while data service revenues have grown an average of 37 percent per quarter, Sprint customers subscribing to the carrier’s PCS Vision service have begun to decline.
The report also found that while Sprint has efficiently managed capital expenditures, capex per subscriber and as a percentage of net operating revenue has declined. Adjusted earnings before interest, taxes, depreciation and amortization have also recently dropped by nearly two-thirds with adjusted EBITDA per subscriber falling as well.
The report also held out little hope of Sprint turning around its fortunes with increased customer growth, noting that an increase in the number of subscribers has not always produced higher revenues, profits and market share for the carrier. Sprint is currently in the process of merging with Nextel Communications Inc., which will bolster the combined operations’ subscriber base to more than 35 million subscribers.
The firm did not specify if it had done similar analyses of other wireless carriers.
