Rounding out what has been a record-setting quarter for the country’s nationwide operators, Sprint Corp. reported fourth-quarter 2004 results last week that pushed net customer additions by the industry’s big 5 past the 5.5 million subscriber mark for the quarter and to nearly 19 million customer additions for the full year.
The strong fourth-quarter growth was a 34-percent improvement compared with the 4.1 million customers added by the then big 6 in 2003 and a 29-percent jump in full-year net additions. The quarterly growth also surpassed the previous record of 5.2 million net subscriber additions during the fourth quarter of 2000 by nationwide operators, as well as the 17 million subscribers added for all of 2000.
Sprint reported a company record 1.58 million net wireless subscriber additions during the final three months of last year, which included 526,000 direct subscribers, 133,000 affiliate net additions and 923,000 reseller net additions. The carrier’s direct subscriber additions were slightly ahead of the 450,000 to 500,000 net customer additions predicted by most analysts and a significant improvement compared with the 390,000 direct customers Sprint added during the fourth quarter of 2003.
For the year, Sprint said it added 4.4 million total subscribers, including 2 million direct, 374,000 affiliate and 2.1 million reseller net additions, and ended 2004 with 17.8 million direct and 24.8 million total customers on its network.
Boosting the carrier’s strong fourth-quarter direct customer growth was an increase in gross additions from 1.67 million in 2003 to 1.94 million this year that offset flat customer churn of 2.7 percent.
“Sprint’s number were definitely at the high end of estimates, but their direct growth pales in comparison to some of its competitors,” said N. Moore Capital Ltd. telecom industry analyst Jeffrey Hines. “You also have to watch their indirect growth. Even though they are typically lower-cost additions and are still generating revenues, no one is quite sure about their loyalty.”
Sprint also reported that average revenue per user remained constant year-over-year at $62, which also was within analysts’ forecasts. Data services contributed $5.50 or 9 percent to total ARPU for the fourth quarter of this year compared with $3.50 during the fourth quarter of 2003.
Financially, Sprint posted a 16-percent year-over-year increase in wireless revenues from $3.3 billion during the fourth quarter of 2003 to $3.8 billion this year. The increase was aided by a 95-percent increase in wholesale and affiliate revenues from $101 million in 2003 to $197 million last year. Full-year revenues increased 15.4 percent from $12.7 billion in 2003 to $14.6 billion last year.
Fourth-quarter operating income increased from a loss of $96 million in 2003 to a return of $406 million last year, while full-year operating income more than doubled from $634 million in 2003 to $1.55 billion last year.
Sprint Chairman and Chief Executive Officer Gary Forsee also noted that the company plans to file paperwork with the Federal Communications Commission within the next week regarding its pending merger with Nextel Communications Inc. If approved, the $35 billion deal would create a new company-Sprint Nextel-with nearly 40 million total subscribers.
Sprint’s robust growth followed similar results from Cingular Wireless L.L.C., Verizon Wireless, T-Mobile USA Inc. and Nextel, all of which posted year-over-year fourth quarter increases. Including Sprint’s indirect subscriber additions, four of the five carriers reported more than 1 million net customer additions during the fourth quarter and three of the five added more than 4 million subscribers for the year.
“It just points to the new model in the wireless industry that has been driven by consolidation,” Hines said. “There are just fewer and fewer competitors in the market and customers are increasingly looking at nationwide providers.”
Hines added that the big 5 operators are set to account for 94 percent of total customer additions during the fourth quarter of 2004, compared with 91 percent during the third quarter of last year and the 80 percent of total subscriber additions the big 6 operators accounted for during the fourth quarter of 2000.
