Customers Flee From #Nextel As Shutdown Looms

Sprint activated 1.5 million iPhones in the quarter, down from 1.8 million in the fourth quarter.

Helped by a $10 per month surcharge on smartphones imposed last year, Sprint's wireless service revenue rose 7.4 percent from a year ago, compared to 7.7 percent at Verizon, which has had more time to sell the iPhone. At AT&T, the figure was 4.3 percent.

"Sprint posted easily the most impressive (quarter) in U.S. telecom," said Kevin Smithen, an analyst at Macquarie Securities.

Sprint shares 4 cents, or 1.6 percent, to $2.51 in mid-morning trading. The shares are still close to a three-year low of $2.10 hit in January.

However, Sprint's contract subscriber additions turn into a net loss of 192,000 when the outdated Nextel network is included. Since buying Nextel in 2005, Sprint has struggled with the cost of running two disparate wireless networks, even as Nextel customers have cancelled service in droves. It's scheduled to shut the network down next year.

The depreciation, or drop in value, of the Nextel network widened Sprint's net loss from January through March to $863 million, or 29 cents per share. In the same quarter last year, the Overland Park, Kan., company's loss was $439 million, or 15 cents per share.

Analysts polled by FactSet were on average expecting a loss of 42 cents per share. Sprint beat that with the help of the better service revenues and a one-time benefit from a cancelled network-sharing contract.

Revenue was $8.73 billion, up 5 percent from a year ago. Analysts were expecting $8.71 billion.

Sprint has already started thinning out the Nextel network, turning off cell towers. Steve Elfman, the head of network operations, said this shouldn't affect service, since there are only 5.4 million Nextel subscribers left. That's 10 percent of the overall number of Sprint Nextel customers.

On the radio frequencies freed up by the Nextel phase-out, Sprint is building a new fourth-generation, or 4G, wireless broadband network using the "LTE" technology AT&T and Verizon are using. It's reducing its reliance on Clearwire Corp.'s 4G network for data service for its smartphones. That means Clearwire 4G, which is based on an older network technology, is no longer a selling point for its smartphones. Sprint will now make Clearwire 4G available on phones for its Boost Mobile and Virgin Mobile pay-as-you go brands, Hesse said.

Sprint has 15.3 million pay-as-you-go subscribers, making it second only to Tracfone in the U.S. no-contract phone market.


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