Sprint loss widens on iPhone costs

Sprint Nextel posted a wide quarterly loss of $1.3 billion this quarter, predominately due to the heavily subsidized Apple iPhone. Sprint’s subscriber growth also fell below expectations, adding 161,000 net subscribers compared with average expectations of 272,000 net customers from eight analyst estimates compiled by Reuters. The telecom operator’s shares were down 3.7% after reporting its quarterly results Wednesday.



Sprint Nextel posted a wide quarterly loss of $1.3 billion this quarter, predominately due to the heavily subsidized Apple iPhone. Sprint’s subscriber growth also fell below expectations, adding 161,000 net subscribers compared with average expectations of 272,000 net customers from eight analyst estimates compiled by Reuters. The telecom operator’s shares were down 3.7% after reporting its quarterly results Wednesday.


While Sprint’s (Overland Park, Kan., USA) rivals Verizon Wireless (New York) and AT&T Inc (Dallas, Texas, USA) also struggled in the fourth quarter with rising costs they had stronger subscriber growth than Sprint.


Sprint sold 1.8 million iPhones in the quarter, 40% of which went to new customers. However, this was below BTIG analyst Walter Piecyk’s expectation for 2 million iPhones. He said that upgrades to iPhone from Sprint‘s existing customers were likely stunted by its tightening of upgrade policies.


Sprint’s net loss widened to $1.3 billion, or 43 cents per share, from $929 million, or 31 cents per share, a year earlier. Revenue rose to $8.72 billion from $8.3 billion and was slightly ahead of Wall Street expectations for $8.69 billion, according to Reuters.


Its margin based on operating earnings before interest, depreciation and amortization (OIBDA) fell to 9.5% from 16% a year earlier but beat expectations for 8.6%, according to eight analyst estimates Reuters compiled.


The addition of the iPhone to Sprint’s lineup during the quarter did not win the company as many subscribers as Wall Street expected.


“There was nothing in the quarter that gave people an indication it was time to buy the stock,” said Piecyk. “They were the only operator that sold less iPhones than we expected in a record quarter for iPhone.”


Sprint’s Chief Executive Dan Hesse, who has been working to turn around the company for four years, said he decided against cutting Sprint phone prices further in what he described as an unusually competitive fourth quarter.


“During the quarter we saw unprecedented discounting on devices,” Hesse told analysts on a conference call. He also noted that Sprint was losing customers from the Nextel network, which it plans to shutter by the middle of 2013.


Sprint also warned that its profit margins would continue to be under pressure in 2012, because it is paying billions of dollars for a costly network upgrade on top of heavy iPhone expenses.


(Reporting by Sinead Carew; Editing by Derek Caney)