RESTON, Va.—Sprint Nextel Corp. reported a mixed first quarter, with gross additions up compared to the same period last year and wireless revenues up; however, merger-and-integration costs pulled down the company’s earnings.
Sprint Nextel’s earnings took a hit from costs of $105 million related to mergers, integration and the planned spinoff of its local wireless business, along with $67 million in restructuring and asset impairment charges.
Sprint Nextel said it added 1.3 million net subscribers, with the mix again showing a high percentage of prepaid adds: 563,000 postpaid CDMA and iDEN customers, 502,000 Boost Mobile L.L.C. iDEN subscribers, and 273,000 customers added through wholesale and Sprint Nextel’s remaining CDMA affiliates. As a result of affiliate acquisitions completed in the first quarter, Sprint Nextel was able to count an additional 1.6 million network users as direct customers. The carrier’s churn rate held steady at 2.1 percent, and Sprint Nextel ended the quarter with about 48.9 million subscribers—of which about 39.1 million are direct Sprint Nextel postpaid customers.
Sprint Nextel, which continues to lead the national carriers in average revenue per user, saw ARPU declines of about 3 percent compared to the same quarter of 2005, to about $62.
Sprint Nextel’s wireless revenues were up 13 percent pro forma from the prior year’s first quarter, to $8.5 billion. Overall, the company’s net operating revenues grew 9 percent pro forma to $11.5 billion.
Sprint Nextel shares fell about 3.1 percent in midday trading as Wall Street responded to the earnings release.
“This was a soft quarter for Sprint Nextel, but the company reiterated guidance and [as] previously noted expects synergies to ramp throughout the year,” said Bear Stearns & Co. Inc. analyst Mike McCormack. “We see the Sprint Nextel pictures becoming clearer over [the] next few months.”
