Sprint Nextel reported Q3 net operating revenues of $8.0 billion, a net loss of $478 million and a diluted loss per share of 17 cents. The company generated free cash flow of $664 million in the quarter and $2.1 billion year-to-date in 2009. As of September 30, 2009, the company had $5.9 billion in cash, cash equivalents and short-term investments and $1.6 billion in borrowing capacity available under its revolving bank credit facility, for total liquidity of $7.5 billion.
Sprint lost a total of 135,000 net retail subscribers in the quarter. The company’s year-over-year post-paid gross addition improvement was the best in Sprint Nextel history, and the sequential improvement was the best in more than five years. Net post-paid subscriber losses have improved by approximately 20 percent in each of the second and third quarters of 2009.
“Sprint achieved its best net retail subscriber results in more than two years and improvement in both post-paid and prepaid gross subscriber additions in the third quarter,” said Dan Hesse, Sprint Nextel CEO.
Some highlights for Q3:
- Sprint served 48.3 million customers at the end of the third quarter of 2009, compared to 48.8 million at the end of the second quarter of 2009. This includes 33.6 million post-paid subscribers (25.0 million on CDMA, 7.8 million on iDEN, and 870,000 Power Source users who utilize both networks), 5.7 million prepaid subscribers (5.2 million on iDEN and 500,000 on CDMA) and 8.9 million wholesale and affiliate subscribers, all of whom utilize the company’s CDMA network.
- For the quarter, net retail subscribers declined by a total of 135,000 and net wireless customers declined by approximately 545,000, including net losses of 801,000 post-paid customers — comprising 271,000 CDMA and 530,000 iDEN customers (including a net 64,000 customers who transferred from the iDEN network to the CDMA network). The company gained a net 801,000 prepaid iDEN customers, offset by net losses of 135,000 prepaid CDMA customers. The company also experienced a net loss of 410,000 wholesale and affiliate subscribers as a result of subscriber losses from our mobile virtual network operators and deactivation of open machine-to-machine devices that had been activated in the second quarter but may not be utilized.
- More than 9% of post-paid customers upgraded their handsets during the third quarter, a slight increase sequentially, resulting in increased contract renewals.
- Post-paid churn in the quarter was 2.17% compared to 2.15% in the year-ago period and 2.05% in the second quarter of 2009. The sequential increase is due to seasonality and heightened competition.
- Prepaid churn in the third quarter of 2009 was 6.65%, compared to 8.16% in the year-ago period and 6.38% in the second quarter of 2009.
- Wireless service revenues for the quarter of $6.3 billion declined 8% year-over-year and 2% sequentially. The year-over-year and sequential decline is due to fewer post-paid subscribers, partially offset by more prepaid subscribers.
- Wireless post-paid ARPU has been stable for the past seven quarters at approximately $56, primarily due to continued growth in fixed-rate bundled plans such as Simply Everything, offset by declines in usage and roaming.
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