Sprint Nextel shows boost in profits

Sprint Nextel Corp. confirmed its dismal fourth quarter customer numbers with the release of its full financials, but reported a silver lining of a 32-percent increase in profits for the quarter.
The carrier’s stock was up around 5 percent after the news to $19.41 per share.
The carrier announced in early January that it expected to report a loss of about 306,000 postpaid customers during the fourth quarter, reflecting continued losses from the Nextel side of its business. Sprint Nextel gained 742,000 overall net customers during the fourth quarter.
Sprint Nextel chairman and CEO Gary Forsee said the company had poured money into business operations and network investments during the fourth quarter in order to improve its metrics.
“We are seeing early returns from these investments as we widen our lead in wireless data services on the CDMA platform and with the iDEN network now delivering substantially improved call-quality metrics,” Forsee said. He went on to note that the company “experienced uneven financial performance between our network platforms and within some of our key wireless metrics.”
The carrier highlighted those differences by breaking out detailed CDMA and iDEN information-information the carrier does not typically provide-such as average revenue per user stats on postpaid subscribers for each network. Total ARPU for the fourth quarter was around $60 postpaid, down about 1 percent sequentially and about 5 percent year-over-year. Sprint Nextel said that CDMA ARPU was down 1 percent year-over-year, while iDEN ARPU fell 8 percent.
According to Sprint Nextel, it gained more than 1.3 million net CDMA postpaid, wholesale and affiliate customers during the fourth quarter; that figure was offset by losses on the iDEN side. The carrier ended the quarter with a subscriber base of 53.1 million. The number keeps Sprint Nextel in third place among national carriers, but the carrier is not keeping pace with the growth of larger competitors Verizon Wireless and Cingular Wireless L.L.C.
Sprint Nextel’s churn rate was up from 2.1 percent in the fourth quarter of 2005 to 2.3 percent in 2006’s fourth quarter, although the rate fell slightly from 2.4 percent in the third quarter of 2006. Prepaid churn among customers of the company’s Boost Mobile L.L.C. sub-brand also increased, from 4.8 percent to 6.5 percent during the fourth quarters of 2005 and 2006. Boost’s ARPU plunged 14 percent year-over-year to just under $32.
The carrier said its data revenues increased 66 percent compared with the fourth quarter of 2005, and contributed $8.75 to overall ARPU and almost $12, or 20 percent, of CDMA postpaid ARPU.
Wireless revenues were up 9 percent year-over-year to $9 billion for the fourth quarter. Sprint Nextel reported that its net income for the fourth quarter was up 32 percent to $261 million, but down almost 26 percent from the full-year results for 2005.
Interestingly, Sprint Nextel said it would not participate in the upcoming 700 MHz spectrum auction, according to media reports. The news comes as little surprise since Sprint Nextel already commands a significant chunk of spectrum in most of its markets; indeed, the carrier did not participate in the Federal Communications Commission’s spectrum auction last year either.