Sprint reports 1.5M iPhones sold and $863M net loss in Q1 2012, says WiMAX coming to Boost and Virgin

Alex Wagner
Editorial Director of News and Content from Omaha, NE
Published: April 25, 2012

Sprint logo

Sprint is the next major U.S. carrier in line to share its first quarter 2012 earnings results. The carrier announced this morning that it had wireless service revenues of $7.2 billion for the quarter, a seven percent jump year over year. However, it also posted an operating loss of $255 million and a net loss of $863 million. Sprint says that it added nearly 1.1 million total customers, which included 263,000 postpaid adds and 875,000 prepaid subs, bringing it to a record total of 56 million total subscribers. iPhone sales finished the quarter at 1.5 million, with 44 percent of the devices going to customers new to Sprint.

Sprint also touched a bit on its Network Vision plan, which includes its move to 4G LTE. It was reiterated that Sprint plans to launch LTE in six cities (Houston, Dallas, San Antonio, Atlanta, Kansas City and Baltimore) by mid-year, but there's still no firm date on when the coverage will be going live. Sprint also said that it plans to have 12,000 LTE sites online by the year, with work already underway on 25 percent of those sites and 5 percent already operational. Sprint CEO Dan Hesse also mentioned during this morning's earnings call that both Boost Mobile and Virgin Mobile will soon be offering 4G WiMAX service and that more details would be shared as the launch nears.

The first quarter looks to have been a bit of a mixed bag for Sprint. It grew to a record number of total customers and moved 1.5 million iPhones, nearly half of which were sold to new subscribers, but it also posted a large new loss. Of course, Sprint posted a net loss of $1.3 billion in Q4 2011, so its Q1 2012 loss of $863 million is an improvement from that. We're listening in on Sprint's live earnings conference call right now and will pass along any juicy tidbits of information that the carrier may share.

Sprint Nextel Reports First Quarter 2012 Results

Best ever Sprint platform postpaid ARPU increase of $4.03, or 6.9 percent, year-over-year drives Sprint platform wireless service revenue growth of 16 percent year-over-year

Operating loss of $255 million; Adjusted OIBDA* of $1.2 billion, which includes $104 million in Network Vision related operating expense

263,000 postpaid net additions on the Sprint platform in the quarter – eighth consecutive quarter of postpaid subscriber growth on the Sprint platform

Total company net additions of more than 1 million for the sixth consecutive quarter

Strong iPhone sales of more than 1.5 million – 44 percent to new customers

Network Vision deployment continues on track

Continue to expect six major cities to launch 4G LTE by mid-year

Continue to expect 12,000 sites on air by end of 2012

To date work has begun on 25 percent of planned 2012 sites; 5 percent are on air

Nearly 1,300 iDEN sites taken off air to date; expect 9,600 total by the end of the third quarter

The company’s first quarter 2012 earnings conference call will be held at 8 a.m. ET today. Participants may dial 800-938-1120 in the U.S. or Canada (706-634-7849 internationally) and provide the following ID: 68178739 or may listen via the Internet at www.sprint.com/investor.

OVERLAND PARK, Kan. (BUSINESS WIRE), April 25, 2012 - Sprint Nextel Corp. (NYSE: S) today reported a net loss of $863 million and a diluted net loss of $.29 per share for the first quarter of 2012. This compares to a net loss of $439 million and a diluted net loss of $.15 per share in the first quarter of 2011 and includes depreciation of approximately $543 million, or negative $.18 cents per share, primarily due to accelerated depreciation related to the expected shut down of the Nextel platform and a one-time net benefit of $170 million, or approximately $.06 per share, related to the spectrum hosting contract termination with LightSquared. The company had wireless service revenues of $7.2 billion during the quarter, an increase of more than 7 percent year-over-year, driven primarily by Sprint platform postpaid ARPU growth of $4.03 – the largest year-over-year increase on record for the U.S. wireless industry. The company reported total net subscriber additions of nearly 1.1 million during the first quarter, bringing total ending subscribers to a record 56 million.

The total number of customers on the Sprint platform grew almost 4 percent sequentially including 263,000 postpaid net subscriber additions, 870,000 prepaid net subscriber additions and 785,000 wholesale and affiliate net subscriber additions. Sprint recorded more than 1.5 million iPhone® sales in the first quarter with 44 percent going to new customers. Prepaid churn on the Sprint platform improved to 2.92 percent, the tenth consecutive quarter of year-over-year improvement.

“The continuing revenue growth on the Sprint platform, which represents the future of our company, driven by record ARPU improvement and strong net subscriber growth, contributed to our Adjusted OIBDA* performance of $1.2 billion,” said Dan Hesse, Sprint CEO. “The value and simplicity of our unlimited data, talk and text plans, combined with an unsurpassed customer experience and our increasingly robust device portfolio make for a strong combination.”

NETWORK VISION HIGHLIGHTS

Sprint’s Network Vision initiative remains on track. To date, the company has approximately 600 sites on air, which are meeting speed and coverage enhancement targets. Zoning requirements are completed for approximately 9,700 sites and leasing agreements have been completed for close to 7,700 sites. More than 3,200 sites are in notice to proceed status and work has started on approximately 3,000. Sprint expects to bring approximately 12,000 sites on air by the end of 2012 and to complete the majority of its Network Vision roll-out in 2013. The company has also taken approximately 1,300 iDEN sites off air to date and expects to shut down a total of 9,600 before the end of the third quarter.

In addition, as part of Network Vision, Sprint continues to expect to launch 4G LTE in six major cities by mid-year 2012 including Houston, Dallas, San Antonio, Atlanta, Kansas City and Baltimore. This week, Sprint launched its first two 4G LTE smartphones – Galaxy Nexus™ and LG Viper™ 4G LTE with eco-friendly features – and earlier this month also announced the upcoming launch of HTC EVO 4G LTE™.

“We continue to hit our key internal milestones and make significant progress on Network Vision,” said Hesse.

CUSTOMER EXPERIENCE AND BRAND HIGHLIGHTS

During the first quarter, Sprint recorded its lowest level of calls to customer care per postpaid subscriber on record, consistent with more third-party recognition of Sprint’s customer experience. Sprint was ranked by J.D. Power and Associates highest among full-service providers in its 2012 Wireless Purchase Experience Study, Volume 1. Boost Mobile was ranked highest among non-contract providers in the same study and Virgin Mobile USA received the highest ranking in the J.D. Power and Associates 2012 Wireless Customer Care Non-Contract Study – Volume 1, with Boost placing second. This month, Sprint Wholesale collected four 2012 Domestic Best-In-Class Awards from Atlantic-ACM in the categories of Network, Provisioning, Customer Service and Sales Representatives. Sprint also received the ATLANTIC ACM Best-in-Class Network Award for Global Wholesale Excellence earlier this year and Frost & Sullivan identified Sprint as an excellent example of an end-to-end mobile solution provider for the small business sector.

Sprint also launched several innovative products and services in addition to its 4G LTE devices. Sprint introduced its first tablet for under $100 with a two year agreement, ZTE Optik™ as well as ZTE Fury™, a family-friendly Android-powered device. Boost Mobile began offering LG Rumor Reflex™ – the fifth device from Sprint with eco-friendly attributes and the second from Boost. Additionally, the company introduced Sprint Complete Collaboration, the most comprehensive hosted and fully managed unified communications bundle available for businesses and launched additional Sprint Biz 360 solutions, phone and applications for small businesses. Sprint also created New Ventures, a new organization focused on delivering new business models that leverage open platforms to drive revenue and overall customer satisfaction for the global marketplace.

LIQUIDITY

During the first quarter, Sprint raised additional financing of $2 billion to help fund the Network Vision deployment, debt maturities and working capital requirements over the next few years. This followed financing of $4 billion raised in the fourth quarter of 2011. Sprint’s next scheduled debt maturities include $300 million due in May 2013 and $1.5 billion due in October 2013. As of March 31, 2012, the company’s total liquidity was approximately $8.8 billion, consisting of $7.6 billion in cash, cash equivalents and short-term investments and $1.2 billion of undrawn borrowing capacity available under its revolving bank credit facility. Sprint generated $978 million of net cash provided by operating activities and $138 million of Free Cash Flow* in the quarter.

Via Sprint, MobileBurn