Sprint loses nearly 1.1 million wireless customers

Sprint Nextel Monday reported losing nearly 1.1 million wireless customers in the first quarter, marking the sixth time in the last seven quarters that the company has lost postpaid wireless customers.

Overall the company reported a net loss of just more than $500 million for the quarter. Sprint says one major reason for its net loss was the poor performance of its wireless business, which saw a 9% decline in first quarter revenues over its revenues in the first quarter of 2007. The biggest reason for this decline in revenue, says Sprint, was the loss of 1.09 million wireless customers during the first quarter, including the loss of 1.07 million post-paid subscribers. Additionally, Sprint reports that its wireless post-paid average revenue per user (ARPU) came in just less than $56, a 6% decline from the first quarter of 2007.

"As expected, our wireless business delivered weak financial results," says Sprint CEO Dan Hesse. "While the business will continue to face challenges in the short term, we are making progress in methodically attacking the sources of our performance issues."

Although Sprint has experienced a steady decline in post-paid wireless subscribers over the past year, the loss of 1.07 million in the first quarter of 2008 almost equals the company's total loss in post-paid subscribers for all of 2007. Sprint's well-publicized troubles with its wireless business have recently fueled rumors that the company is considering spinning off its Nextel unit, with Nextel founder Morgan O'Brien, who is currently the CEO of telecom company Cyren Call, said to be an interested party.

Telecom analyst Jeff Kagan says Sprint's continued poor performance and customer losses were to be expected for the first quarter of 2008, as Sprint forecasted a net loss of 1.2 million customers. The real test, Kagan says, will come in the next year after new CEO Hesse has had time to implement his turnaround strategy.

"Fixing Sprint Nextel will take several quarters," he says. "The company got off track and spent a few years wandering in the desert, and now it will take several quarters to nudge it back on track… There are a variety of areas that need attention, but nothing is un-fixable. Over the next few quarters we will start to see the company get stronger rather than weaker like we see in this quarter."

The financial news follows by less than a week Sprint's blockbuster announcement with Clearwire that they are combining their WiMAX businesses to create a new $14.5 billion mobile broadband company.