Sprint Nextel Loses Subscribers, Delays Network Vision Infrastructure

Updated on

On Thursday, Sprint Nextel Corporation  (NYSE:S) announced in its third quarter earnings report that subscribers had left the carrier for its competitors, Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T).

Sprint Nextel Loses Subscribers, Delays Network Vision Infrastructure

This represented a first for the company to lose overall subscribers in a two and a half year period. Customers have had enough of the dying Nextel network and many did not switch over to the Sprint network, reported the New York Times

Along with the Nextel losses, the defections to rival carriers left the company incurring a loss more than double, as compared to the previous year, but less than analysts had forecast.

Earlier this month, here at ValueWalk, we took at look at the company’s earnings and fundamentals.

Sprint Nextel Corporation  (NYSE:S) reported for the third quarter, a $767 million loss (26 cents per share) as compared to a $301 million (10 cents per share) loss in the previous year. Revenue increased 5 percent to $8.76 billion. This exceeded analysts estimates of a 43 cents per share losses on revenues of $8.81 billion.

In the third quarter, Sprint saw 423,000 subscribers exit. In addition, the trends in its product lineup were also weak.

Without the signing of Nextel customers, for the first time in years, Sprint had lost subscribers for contracts. This is a lucrative base for the company, and had been key in the turnaround plan set out by the company’s chief executive,  Daniel R. Hesse.

For the quarter, Sprint Nextel Corporation  (NYSE:S)’s non-contract plans did increase by 19,000 customers–its lowest number in three-plus years.

Along with news of exiting subscribers, Sprint said in its third quarters earnings call with analysts, on Thursday, that the deployment of its Network Vision infrastructure, which includes the rollout of its 4G LTE technology, is about three months behind schedule, thanks a number of factors.

The new infrastructure will enable Sprint to run multiple network technologies and host multiple spectrum bands from the same set of sites, reported PCWorld. While it’s being deployed, Sprint will install LTE and upgrade its 3G CDMA system, but it plans to phase out its narrowband iDEN network initially utilized by Nextel.

The Network Vision deployment has been expected to hit 12,000 cell sites in 2012.

Steven Elfman, Sprint’s president of network operations and wholesale, said on Thursday’s call via PCWorld, “While we’re encouraged by the momentum of the project, we have been seeing some delays from our vendors, largely related to logistics execution and material shortages, as well as some delays related to the hurricanes in the third quarter. And now, we believe, we’re approximately one quarter behind in hitting the 12,000 target.”

Elfman added that it “has not meaningfully delayed” either Sprint’s forecast for the project’s timing or cost. Network Vision is expected to be completed by the end of 2013.


Leave a Comment