Following on from our story yesterday about Sprint Nextel's acquisition of Virgin Mobile USA it has emerged that the fortunes of the third-biggest wireless operator in America have not, so far, improved as a result, writes Martyn Warwick.
Yesterday evening (UK time) Sprint posted its Q2 results showing that revenues and subscriber numbers continue to fall. The market reacted to the Virgin Mobile news by knocking 1.4 per cent off Sprint's stock price and then sliced a further 11.7 per cent away as the latest bad figures percolated through.
Desperately seeking to find the teeniest glimmer of a silver lining in the storm clouds massing over his company, Sprint Nextel's CEO, Dan Hesse, claimed to be "encouraged" that the the rate of attrition of departing subscribers has slowed for a while. He said, "Whilst we are not satisfied that we lost a quarter of a million customers in the quarter, the rate of defections is slowing". Now there's a man who's easily pleased.
Sprint Nextel reported a loss os US$384 million for the quarter ended June 30 this year. For the same period a year ago the loss was $344 million so things are getting worse but Dan's a "glass half full" man if ever there was one. Revenues too were down by a full 10 per cent at $8.14 billion. For the same quarter last year they were $9.06 billion.
All around the world fixed line revenues are in decline and have been for several years now, however Sprint is contriving to lose mobile revenues as well. They fell by nine per cent over the period as a further 257,000 subscribers voted with their feet and deserted the carrier. That's on top of the 182,000 that walked in Q1. And that's just prepaid customers.
The postpay results are even worse. in Q2 991,000 contacts were not renewed. Sprint also lost 1.23 million postpay customers in Q1 and 780,000 during Q2 a year ago. That rate of attrition is simply insupportable in the long term.
To put things in perspective, as Sprint was losing subscribers hand-over-fist, the company's arch-rivals Verizon and AT&Trespectively added 1.1 million and 1.37 million new customers to their rolls in the same period.
Again though, Mr Hesse is taking remarkable succour from the fact that 938,000 new prepaid customers subscribed to Sprint's iDEN network in Q2.
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