Sprint Q2 Loss Nearly Doubles But Narrower Than Street Estimates

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Looking ahead, Sprint said its total subscriber base will continue to grow strongly, helped by lower decline of post-paid subscribers.

Sprint CEO Dan Hesse said the company's increasing focus on "improving the customer experience, strengthening our brands, and generating cash" paid off in the recent quarter and will help them "improve our subscriber forecasts for the second half of 2010 and deliver positive total net wireless subscriber additions for the remainder of the year."

Market analysts commended Sprint's financial performance, saying they expected much worse.

The analysts said intense competition, especially from Apple Inc.'s wireless partner in the US, AT&T Inc. which launched iPhone 4 in June, ate into Sprint's revenue and subscriber base. In the June quarter, AT&T, aided by sale of iPhone 4, added 496,000 contract subscribers while No.1 mobile operator Verizon Wireless added 665,000.

However, launches of some popular smartphones such as Evo 4G and roll out of 4G network in the US, helped offset the losses. Sprint, the first mobile operator in the US to roll out 4G network, which boasts of higher data speed, launched Evo 4G, the first 4G enabled smartphone in the US in June and soon witnessed a shortage of supply.

"It was a very good number relative to expectations," said Roe Equity Research analyst Kevin Roe.

Agrees Wells Fargo & Co. analyst Jennifer Fritzsche. "The introduction of the 4G EVO handset has been a nice catalyst," Fritzsche said. "Sprint has continued to capture significant share from T- Mobile and hold its own versus Verizon and AT&T."

Analysts said they worried about the decline in Sprint's post-paid subscriber base. The company said the rate of post-paid subscribers calncelling service every month was 1.85 percent in the June quarter, Sprint's lowest figure ever, but still higher than the corresponding figure at Verizon Wireless and AT&T.

Ever since Sprint acquired Nextel in 2005, it has faced an exodus of post-paid subscribers, especially those who use smartphones. The reason is because Nextel's network is poorly suited for smartphones, though it is valued for its push-to-talk function.

Oppenheimer & Co. analyst Timothy Horan said he expected Sprint to report a loss of 375,000 post-paid subscribers during the quarter, down from 578,000 in the March quarter and almost 1 million in the June quarter of 2009.

However, the result shows that Sprint has "done a good job selling its high-profile EVO 4G handset," Horan said.

Shares of Sprint were up 5.18 percent at $5.08 during pre-market trade on Wednesday.