Thursday, November 6, 2008

Sprint Nextel Loses 1.3 million Customers in Q3, Re-Negotiates Credit

Sprint lost a total of 1.3 million net wireless customers during Q3, including losses of 1.1 million post-paid customers and 329,000 prepaid users, which was slightly offset by a 130,000 increase in the number of wholesale and affiliate subscribers. This gives Sprint a total of 50.5 million customers at the end of the period, compared to 54.0 million at the end of the third quarter of 2007. At the end of the third quarter, the company served 37.8 million post-paid subscribers, 3.9 million prepaid subscribers and 8.8 million wholesale and affiliate subscribers. Subscribers by network platform include 35.4 million on CDMA, 13.5 million on iDEN and 1.6 million Power Source users who utilize both networks. More than 9% of post-paid customers upgraded their handsets during the third quarter, resulting in increased contract renewals.

Sprint's revenues for Q3 were $8.8 billion, 3% lower than in the second quarter, primarily due to a lower contribution from wireless. Wireless service revenues for the quarter of $6.8 billion declined 13% year-over-year and 3% sequentially. Wireline revenues of $1.6 billion for the quarter were slightly lower sequentially and year-over-year as legacy voice and data declines offset Internet revenue growth.

Wireless capital investments were $217 million in the third quarter, compared to $393 million spent in the second quarter of 2008 and $813 million spent in the third quarter of 2007. Lower spending levels reflect reduced capacity needs and the conclusion of several network investment initiatives.

Also, Sprint announced that it successfully renegotiated the terms of its revolving credit facility and increased the ratio of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and certain other non-recurring charges from no more than 3.5 to 1.0 to no more than 4.25 to 1.0. The company also paid down $1 billion of outstanding debt and decreased the current borrowing capacity of the credit facility from $6 billion to $4.5 billion, of which $1.3 billion is available.

"During tough economic times, we tightly managed our business to generate and retain cash and maintain substantial liquidity while continuing to reduce debt. At the same time, we made advancements in improving operations and delivering on the promise of the Now Network," said Dan Hesse, Sprint Nextel CEO. "Customer care metrics have improved steadily throughout the year, and external surveys are confirming we're providing a better customer experience."

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