Sprint Nextel suffers loss of post-paid customers

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Sprint Nextel lost valuable post-paid customers for the third consecutive quarter, underscoring the challenges facing the third largest US mobile carrier as it grapples with post merger problems.

The Kansas-based group said it gained a a total of 568,000 new wireless subscribers during the first quarter, but lost 220,000 high-quality customers who pay their bills at the end of the month and typically spend more than post-paid and other subscribers.

Most of the lost subscribers were former Nextel Communications customers who have been frustrated by poor service and other problems since the company was acquired by Sprint in August 2005.

While the decline in post-paid subscribers was less than some analysts had feared, the loss underscores the problems the carrier has had integrating its operations since the merger.

It also suggests that the combined group is continuing to lose market share against its main rivals, AT&T’s mobile operations and Verizon Wireless, the joint venture between Verizon and Britain’s Vodafone group, which both reported strong subscriber growth in the first quarter.

The post paid subscriber losses and efforts by Gary Forsee, chief executive, to reverse the decline contributed to a fist quarter net loss of $211m, or 7 cents a share. The first quarter net loss compares to a profit of $417m, or 5 cents a share from continuing operations a year ago. Revenues were flat at $10.1bn.

Mr Forsee said the first quarter loss partly reflected higher “front loaded” spending to alleviate network and other problems. “These increased commitments, along with notably higher device subsidies to drive acquisition and retention, impacted our profitability in the quarter,” he said.

Despite the disappointing results, the company reiterated that it expects to reverse the subscriber decline in the current quarter and to report annual revenues between $41bn and $42bn.

Sprint Nextel shares, which have fallen by about 12 percent over the past year, gained 66 cents, or 3.3 per cent, to close at $20.67 on Wednesday.

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