Sprint Nextel Slips into 3rd Quarter Loss - Loses 1.3 Million Customers
Published on: 6th Nov 2008
Note -- this news article is more than a year old.
US based Sprint Nextel has swung into a loss as it reported revenues of USD8.8 billion and a loss of USD326 million for the 3rd quarter of this year. This compared with a profit of USD64 million a year ago. If you exclude on off items, the company says it would have broken even for the quarter.
During the quarter, the company retired approximately $1 billion in principal of debt and incurred a $694 million financing obligation related to the close of its tower transaction. As of Sept. 30, 2008, the company had $4.1 billion of cash and cash equivalents. In November 2008, the company renegotiated the terms of its revolving credit facility, providing greater flexibility regarding its financial covenants.
"During tough economic times, we tightly managed our business to generate and retain cash and maintain substantial liquidity while continuing to reduce debt. At the same time, we made advancements in improving operations and delivering on the promise of the Now Network," said Dan Hesse, Sprint Nextel CEO. "Customer care metrics have improved steadily throughout the year, and external surveys are confirming we're providing a better customer experience."
The company made capital investments of $485 million in the quarter, down from $646 million in the second quarter. The decline reflects lower spending in both Wireless and Wireline segments. The company recorded $134 million in capital expenditures in the quarter related to the deployment of WiMAX.
Net Debt at the end of the period was $18.4 billion, consisting of total debt of $22.6 billion, offset by cash and marketable securities of $4.2 billion.
For the quarter, total wireless customers declined by a net 1.3 million including losses of 1.1 million post-paid customers and 329,000 prepaid users, which was slightly offset by a 130,000 increase in the number of wholesale and affiliate subscribers. At the end of the third quarter, the company served 37.8 million post-paid subscribers, 3.9 million prepaid subscribers and 8.8 million wholesale and affiliate subscribers.
Subscribers by network platform include 35.4 million on CDMA, 13.5 million on iDEN and 1.6 million Power Source users who utilize both networks.
Sprint Nextel expects continued pressure on post-paid subscribers in the fourth quarter; however, we expect that gross adds will stabilize and that churn rate will be consistent with the third quarter. We also expect slight downward pressure on post-paid ARPU in the fourth quarter.