Sprint Nextel posts challenging Q3

Sprint Nextel Corp.’s quarterly profits plunged as the carrier bled postpaid iDEN and prepaid Boost Mobile L.L.C. subscribers, posting a net loss of 60,000 subscribers for the quarter.
The company’s net income fell from $279 million in the third quarter of 2006 to $64 million this year.
Sprint Nextel had warned that it would report wireless subscriber losses for the quarter. The operator said that its customer results reflected “mixed performance between network platforms,” including growth from CDMA postpaid subs, its new Boost Unlimited offer and wholesale and affiliate channels-which was offset by losses from iDEN postpaid and Boost prepaid subscribers.
Sprint Nextel’s Boost prepaid churn rate was 6.2%-down from 6.8% during the same period last year-and its postpaid churn rate was 2.3%, which the carrier attributed to “seasonally higher involuntary deactivations and competitive market concerns.” The company said it has adjusted how it calculates churn, which reduced its numbers by about 10 basis points.
Paul Saleh, CFO and acting CEO of the company since the departure of chairman and CEO Gary Forsee, said that another factor was “credit market impacts on a portion of our customer base.” He told analysts in a conference call that the struggling company has two goals: improve the customer experience across the board, and simplify its business.
The carrier’s total wireless revenues were off 4% year-over-year and 1% sequentially, although its data revenues grew 28% year-over-year. Postpaid average revenue per user was about $59, down 3% year-over-year. Sprint Nextel ended the quarter with 54 million customers on its network.
Comparatively, AT&T Mobility gained 2 million new subscribers and Verizon Wireless had net customer additions of 1.6 million during the third quarter, and both companies reported substantially lower churn than Sprint Nextel. T-Mobile USA Inc. has yet to report its third-quarter results.
Regarding the company’s various technology initiatives, Saleh said that Sprint Nextel is still on track to soft-launch WiMAX in Baltimore, Chicago and Washington, D.C. later this year-although he did note that the company is slightly behind on equipment purchases. Saleh added that the company is working on how to introduce commercial services in 2008 and still in discussions with Clearwire Corp. about the companies’ WiMAX partnership.
Sprint Nextel also is expecting to launch Qchat push-to-talk service on its CDMA network early next year. Saleh said that the company is determined to “reinvigorate” the Nextel Direct Connect franchise and plans to introduce three new iDEN devices in the next couple of months.
However, when asked about the company’s Pivot product in partnership with cable companies, Saleh said that in the interest of simplifying its business, Sprint Nextel had opted not to expand the sale of Pivot products from the retail stores where it had already been introduced.
Saleh gave no specific updates on Sprint Nextel’s CEO search, and would say only that the board of directors was “working to fill the role as expeditiously as possible.”