Strong results for Sprint Nextel

Sprint Nextel reported strong third-quarter results on Wednesday as Gary Forsee, chief executive, set out an ambitious agenda for the US mobile phone carrier formed as a result of Sprint’s $35bn acquisition of Nextel Communications in August.

“Sprint Nextel is determined to reshape the industry with its exceptional technology portfolio, innovative vision and creative partnerships that span beyond traditional telecom providers,” said Mr Forsee who orchestrated the Nextel purchase.

The third-largest US mobile phone group reported third-quarter profits of $516m, or 23 cents a share, on net operating revenues that increased by 35 per cent to $9.3bn. The profit compares with a loss of $1.91bn, or $1.32 a share, a year
earlier, when Sprint wrote down the value of its
network.

Pro forma adjusted operating income, which removes the effects of special items, increased by 46 per cent to $1.32bn. Pro forma consolidated revenues grew by 8 per cent to $11.2bn, boosted by double-digit growth in Sprint Nextel’s wireless business, a steady contribution from the local phone business and an improved performance from the long-distance business.

Local revenues increased by 5 per cent from the year-ago period despite continued line losses because of wireless substitution and growing competition from cable telephony and voice over internet protocol services.

Executives said they estimate that the company lost about 70,000 lines to cable competitors. Offsetting these losses, the local phone business added 48,000 DSL lines during the quarter, driving a 17 per cent gain in data revenues. The company said it was on track to spin off the local operations in the second quarter of 2006.

Sprint Nextel’s core wireless operations reported pro forma revenue growth of 12 per cent and contributed 72 per cent of the group’s total revenues in the quarter.