Sprint Nextel Corp. continued to stem the long-running trend of subscriber flight in the first quarter but did so by offering cheaper service, and posted a larger loss than a year earlier. Its shares fell 7 percent in pre-opening trading.
The nation's third-largest wireless carrier on Wednesday said it lost a net 75,000 subscribers in the first three months of 2010, compared to a loss of 182,000 in the same quarter last year.
Its quarterly loss amounted to $865 million, or 29 cents per share, versus a loss of $594 million, or 21 cents per share, a year earlier.
Excluding a tax charge of $365 million, the loss would have been 17 cents per share, matching the average estimate of analysts surveyed by Thomson Reuters.
Revenue for the Overland Park, Kan., company slipped 2 percent to $8.09 billion from $8.21 billion. Analysts expected $8.05 billion in revenue.
Its shares dropped 29 cents to $3.80 in pre-opening trading.
Sprint's continued stabilization in subscriber numbers comes as the two larger carriers, Verizon Wireless and AT&T Inc., appeared to run out of new customer prospects. Last week, both reported that the first quarter had the lowest net number of new contract-signing customers in many years.
Against that backdrop, and several years of steep subscriber losses, Sprint did relatively well. However, it's paying a high price for keeping its overall subscriber numbers nearly stable. It's still losing large number of contract-signing customers, and is compensating by attracting customers who prepay for service and don't sign contracts.
Contract-signing customers paid an average of $55 per month in the first quarter. Those who didn't sign contracts paid an average of $27 per month, down from $31 per month in the fourth quarter.
Sprint lost a net 578,000 contract-signing customers, an improvement from a loss of 1.25 million in the same quarter last year. It added a net 348,000 prepaying customers, down from 674,000 added in the same quarter least year, when Sprint's $50-per-month plan for unlimited calling was fresh.
As before, it was the Nextel part of the business, acquired in 2005, that accounted for most of the subscriber flight in the quarter.
The Nextel network offers a popular walkie-talkie-like function popular for on-the-job communications by construction crews and other blue-collar workers, but it doesn't support smart phones well.
As the professional crowd has bailed on Nextel, Sprint has repositioned it as a network for cheap prepaid service. However, even that initiative seemed to falter in the first quarter, as the company lost 44,000 prepaid customers on the Nextel network. Instead, most of the prepaid additions were on the Sprint network.
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