By Jesse Emspak: Subscribe to Jesse's RSS feed
July 29, 2010 11:56 AM EDT
Sprint Nextel is showing net subscriber growth, but will run into problems if it faces continued phone shortages and slowdowns in rolling out its 4G network.
Sprint reported a loss of $760 million for the quarter, versus $360 million for the same period a year ago. Customer additions were better, with the total number of subscribers rising by 110,000 to 48.2 million. The decline in contract subscribers is slowing, the company said, and that offsets the slowdown in prepaid subscriber growth.
During a conference call, CEO Dan Hesse said there has been a phone shortage of its new smartphones, such as the Evo. "It's because back in 2008-2009, a lot of capacity went off-line," he said. That put a dent in future supplies. He added the company could probably sell many more of them if they were available.
Sprint also faces competition from the iPhone, which in the U.S. is locked to AT&T's network. "We do feel it when a new iPhone is out," Hesse said. The shortage of Evo smartphones is not helpful in that regard.
Meanwhile there is building out the 4G network. Sprint owns a majority stake in Clearwire, a WiMax network builder that has rolled out in more than 40 markets but hasn't hit some big metropolitan areas.
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Hesse would not say whether Sprint planned to take control of the company, which will not generate its own cash for at least another three years. Nor was he explicit about whether Sprint would provide more financing for the venture.
Clearwire is working under a heavy debt load. The company raised $291 million in a rights offering, but has a total debt of $2.770 billion.
While other carriers, notably AT&T, have looked at tiered pricing for data, in part because of the extra load placed on the network by smartphone users, Hesse said there is no such plan at Sprint. He noted that data usage among the Evo phone users is three and a half times what it is for users of other smartphones, and that is partly "baked in" with the premium customers pay for the phone and the plans.
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