Sprint Nextel Q1 Loss Widens to $594 Million
Published on: 3rd May 2009
Note -- this news article is more than a year old.
Sprint Nextel has reported its first quarter financials and recorded a deepening loss of USD594 million, down by 18% on the USD505 million a year ago. Net operating revenues were $8.2 billion, down 12% on the USD9.3 billion a year ago.
"In the first quarter, we again made progress in our major areas of focus: financial stability, improving the customer experience and reinvigorating the brand," said Dan Hesse, Sprint Nextel CEO. "We achieved the largest sequential improvement in overall gross adds and net adds in Sprint Nextel history, reduced churn versus the prior year, and we generated more than enough cash in this quarter alone to pay all of our 2009 debt maturities."
The company saw its subscriber base continued to decline, ending the quarter with 49.1 million customers - compared to 49.3 million at the end of 2008. This includes 35.4 million post-paid subscribers (25.3 million on CDMA, 8.9 million on iDEN, and 1.2 million Power Source users who utilize both networks), 4.3 million prepaid subscribers (3.5 million on iDEN and 800,000 on CDMA) and 9.4 million wholesale and affiliate subscribers, all of whom utilize the CDMA network.
For the quarter, total wireless customers declined by approximately 182,000, including net losses of 1.25 million post-paid customers – comprising 531,000 CDMA and 719,000 iDEN customers (including a net 94,000 customers who transferred from the iDEN network to the CDMA network). The company also lost 90,000 prepaid CDMA customers. The company gained a net 764,000 prepaid iDEN customers and 394,000 wholesale and affiliate subscribers. The company achieved total subscriber growth on the iDEN network.
As of March 31, 2009, the company had $4.5 billion of cash and cash equivalents and $1.4 billion of borrowing capacity available under its revolving bank credit facility, for total liquidity of $5.9 billion. Net debt decreased by approximately $800 million from the end of the fourth quarter, to $17.1 billion.
Capital expenditures were $291 million in the quarter, compared to $548 million in the fourth quarter of 2008 and $1.4 billion in the first quarter of 2008. Included in first and fourth quarter 2008 capital expenditures is $236 million and $90 million respectively in non-recurring capital expenditures related to the deployment of WiMAX prior to the closing of the Clearwire transaction.
Sprint Nextel anticipates that an increasing number of wireless customers could choose prepaid services instead of post-paid services in this economic environment. Nevertheless, the company continues to expect that not only prepaid, but also post-paid and total subscriber full-year losses should improve in 2009 as compared to 2008. In addition, the company still expects that full-year capital expenditures in 2009 will be consistent with 2008 levels, excluding WiMAX.