Reuters: Technology News: Sprint posts wider quarterly loss on steep costs

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Sprint posts wider quarterly loss on steep costs Jul 30th 2013, 13:46 1 of 2. A woman uses her phone as she walks past a Sprint store in New York's financial district, in this file photo from October 15, 2012. Credit: Reuters/Brendan McDermid/Files By Sinead Carew NEW YORK | Tue Jul 30, 2013 9:46am EDT NEW YORK (Reuters) - Sprint Corp (S.N), the No. 3 U.S. mobile service provider, posted a wider quarterly loss due to hefty costs from shutting down its older Nextel network and it lost more customers than some analysts had expected. Sprint, which sold 78 percent of its shares to Japan's SoftBank Corp (9984.T) in the quarter, has been struggling with Nextel customer losses on the Nextel network since it bought that company in 2005. It finally shut down that network in the second quarter. The company is now banking on savings from the shutdown, SoftBank investments and the addition of spectrum from Clearwire to beef up its network and compete more effectively. Sprint shares fell 3 percent in early trade after the news. Moffett Research analyst Craig Moffett said he was concerned that the company might have to cut service prices if it wants to start reporting quarterly net customer additions again. "The risk of a price war is much higher than it has been in the past," said Moffett, who is worried that service discounts at smaller rival T-Mobile US (TMUS.N) will lure away Sprint customers. "People are struggling with concerns about what it's going to cost to turn this ship around in particular in terms of competition." While Nomura analyst Michael McCormack investors said the quarterly report was in line with his expectations he was worried about Sprint's ability to increase subscribers. "The third quarter is really important from an investor standpoint whether Sprint can start to regain market share," McCormack said. Sprint on Tuesday reported a second-quarter net loss of $1.6 billion, or 53 cents per share, compared with a loss of $1.4 billion, or 46 cents per share, in the year-ago quarter. Excluding items such as transaction costs and charges for the network shutdown, Sprint's loss would have been 31 cents per share, just a penny wider than Wall Street expectations, according to Thomson Reuters I/B/E/S. Sprint lost 1.045 million contract customers in the quarter, more than the average estimate for a loss of almost 972,000 by four analysts contacted by Reuters. Their estimates ranged from a loss of 885,000 to 1.1 million customers. The company said its Sprint-branded service added 194,000 customers in the quarter, but it would have posted a net decline of 170,000 without 364,000 users who moved from the Nextel network to the Sprint service. In comparison Sprint's biggest rival Verizon Wireless (VZ.N) (VOD.L) reported 941,000 subscriber additions and No. 2 U.S. mobile provider AT&T Inc (T.N) added over 550,000 net new subscribers in the second quarter. Sprint has focused its marketing efforts largely on attracting Nextel customers in recent quarters rather than targeting the broader market. Its revenue rose to $8.88 billion from $8.84 billion over the same period. On average Wall Street analysts had expected revenue closer to $8.7 billion, according to Thomson Reuters I/B/E/S. The company said its average revenue per subscriber on the Sprint network increased to $64.20 in the quarter from $63.38 in the year-ago quarter as its customers spent more on wireless data services such as mobile web surfing. While Sprint has struggled for years to compete with its bigger rivals, analysts now expect the company to become a much stronger competitor with the help of SoftBank Chief Executive and founder Masayoshi Son. SoftBank paid $21.6 billion to take control of Sprint on July 10 after months of battling with rival bidder Dish Network Corp (DISH.O). SoftBank already helped Sprint - previously the majority owner of Clearwire Corp - to take full control of that company in order to gain access to Clearwire's vast trove of wireless spectrum to beef up Sprint's network. Sprint said it expects 2013 adjusted operating income before depreciation and amortization (OIBDA) between 5.1 billion to $5.3 billion, including non-cash one-time costs related to its SoftBank deal and its July buyout of Clearwire. Excluding costs related to the deals, Sprint said its 2013 target was for adjusted OIBDA between $5.5 billion and $5.7 billion, which is ahead of its previous forecast that it would reach the high end of a $5.2 billion to $5.5 billion range. Sprint, which is working on a network upgrade aimed at catching up with its bigger rivals, said it would have a 2013 capital spending budget of about $8 billion, in line with previous forecasts around the time of the SoftBank deal. Sprint shares fell to $5.55 in early trade after closing at $5.74 on the New York Stock Exchange after the news. (Reporting by Sinead Carew; Editing by Richard Chang, Stephen Coates and Sofina Mirza-Reid) Link this Share this Digg this Email Reprints

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