Sprint posts massive subscriber exodus in failing to compete with iPhone

Posted:
in iPhone edited January 2014
Shares of Sprint Nextel fell almost 20 percent after the company posted heavy wireless subscriber losses that underlined a failed strategy in competing with US iPhone carriers.



Sprint invested heavily to build a faster WiMAX 4G network, promoting the HTC Evo 4G as the first 4G phone in the US last year. However, the results of its spending have not translated into subscribers, particularly in the face of competition from AT&T's iPhone and the addition of Verizon as an iPhone provider earlier this year.



In its latest quarter, Sprint posted a net loss of 101,000 subscribers, far higher than the 15,000 loss analysts had expected it to suffer. In contrast, AT&T added 331,000 subscribers and Verizon added 1.3 million, aided by news sales of 2.3 million iPhones.



Sprint's chief financial officer Joe Euteneuer said the company had made a "conscious decision" to spend more in the second quarter in the hope of avoiding getting "killed with market share," according to a report by Reuters.



"This was a unique quarter because of intense competition," he added.



Clear disappointment



Instead, Sprint's spending has largely just translated into higher costs for the company, driving down its operating profits margin to 16.3 percent, well below the 19 percent anticipated by Wall Street.



The company's profit margins were particularly hit by Sprint's efforts to deliver rebates to counter the Verizon launch of iPhone 4, and the low cost iPhone 3GS being promoted by AT&T.



Sprint warned that its subscriber losses would continue to get worse this quarter, but hoped to report subscriber growth for the entirety of 2011.



Analysts remained skeptical, with Bernstein analyst Craig Moffett noting, "Without post-paid subscriber growth, Sprint has little prospect of generating sustainable revenue growth, nor of generating sustainably rising margins. On those critical dimensions, Sprint's results were a clear disappointment."





Sprint has been a vociferous critic of the proposed acquisition of T-Mobile by AT&T, which would strengthen the combined carrier's ability to provide nationwide, high speed 4G LTE service, paired with an Apple iPhone capable of tapping the new network.



Combined with Verizon's emerging 4G LTE service, Sprint's own, incompatible 4G WiMAX network developed in partnership with Clear would continue to lose its luster both technically as well as being unable to support an eventual 4G LTE iPhone.
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Comments

  • Reply 1 of 59
    gromitgromit Posts: 37member
    Shit happens.
  • Reply 2 of 59
    anantksundaramanantksundaram Posts: 19,061member
    Takeover bait.
  • Reply 3 of 59
    lkrupplkrupp Posts: 6,812member
    Well now we know why Sprint opposes the AT&T T-Mobile merger. They can't compete as it is. How long before the usual suspects here demand that the government intervene and force customers to return to Sprint? Or force Apple to give Sprint the iPhone?
  • Reply 4 of 59
    lkrupplkrupp Posts: 6,812member
    Quote:
    Originally Posted by anantksundaram View Post


    Takeover bait.



    Verizon?
  • Reply 5 of 59
    anantksundaramanantksundaram Posts: 19,061member
    Quote:
    Originally Posted by lkrupp View Post


    Verizon?



    Yup. Hesse's golden parachute!



    (We'll have to see if they are consistent in their policy position, won't we....)
  • Reply 6 of 59
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by lkrupp View Post


    Verizon?



    Probably not possible even if anti-trust permitted it because of Verizon Wireless ownership structure. It would have to be an all cash bid, or Verizon itself would lose it's outright majority.
  • Reply 7 of 59
    yuniverseyuniverse Posts: 104member
    I hope Sprint quickly is able to take in iPhone to compete with other carriers. I would hate to see another carrier be taken over. Besides iPhones in all 4(or 3) carriers would do Apple good.
  • Reply 8 of 59
    anantksundaramanantksundaram Posts: 19,061member
    Quote:
    Originally Posted by cloudgazer View Post


    Probably not possible even if anti-trust permitted it because of Verizon Wireless ownership structure. It would have to be an all cash bid, or Verizon itself would lose it's outright majority.



    What's the problem with an all-cash bid?
  • Reply 9 of 59
    patranuspatranus Posts: 366member
    Step 1: Release iPhone on AT&T and Verizon

    step 2: Wait until Sprint loses subscribers

    Step 3: Buy Sprint at reduced price

    Step 4: Release Apple branded cell phone network with iPhone.

    Step 5: Profit.
  • Reply 11 of 59
    tallest skiltallest skil Posts: 43,399member
    Quote:
    Originally Posted by Patranus View Post


    Step 4: Release Apple branded cell phone network with iPhone.

    Step 5: Lose all $80 billion of our cash horde as we desperately try to build out a CDMA network that works WORLD. FREAKING. WIDE. because the United States isn't the only country on the planet, nor the only country with the iPhone but is the only country with Sprint and Sprint-compatible services when the entire planet already has a GSM network built out and when we can just have the various carriers in each country do their thing and upgrade their networks to LTE for us like would be the smart thing to do.



    Fixed, I think. Apple buying any cellular carrier is abject nonsense.
  • Reply 12 of 59
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by anantksundaram View Post


    What's the problem with an all-cash bid?



    Nothing, but cash is hard to come by right now for cellular providers because of the cost of LTE investments.
  • Reply 13 of 59
    stashmanstashman Posts: 90member
    Stupid NASCAR Apps don't sell phones.
  • Reply 14 of 59
    I think this might hurt Sprint's chances of disputing the merger., because they are not able to compete against V or T just on their current playing fields.
  • Reply 15 of 59
    anantksundaramanantksundaram Posts: 19,061member
    Quote:
    Originally Posted by cloudgazer View Post


    Nothing, but cash is hard to come by right now for cellular providers because of the cost of LTE investments.



    Really? You know this? How? Any cites?



    Why would a company of the size and credit quality of Verizon have trouble raising $13 billion dollars (plus the premium)? Also, one would imagine that an asset like Sprint would not only bring in tons of new subscribers, but also mitigate Verizon's need for LTE investments?
  • Reply 16 of 59
    Quote:
    Originally Posted by Patranus View Post


    Step 1: Release iPhone on AT&T and Verizon

    step 2: Wait until Sprint loses subscribers

    Step 3: Buy Sprint at reduced price

    Step 4: Release Apple branded cell phone network with iPhone.

    Step 5: Profit.



    Step 4.5: STOP making phones for AT&T & Verizon, then step 5 might work.
  • Reply 17 of 59
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by anantksundaram View Post


    Really? You know this? How? Any cites?



    Why would a company of the size and credit quality of Verizon have trouble raising $13 billion dollars (plus the premium)? Also, one would imagine that an asset like Sprint would not only bring in tons of new subscribers, but also mitigate Verizon's need for LTE investments?



    First it wouldn't be Verizon raising the money, it would be Verizon Wireless - and yes, it could do it, but that would substantially leverage the balance sheet and thus reduce divdend payments to the two owners.



    From Vodafone's perspective it's unclear that it would be to their benefit, given how many international subsidiaries they're going to need to build 4G networks for and how many of those will entail considerable assets just to buy the 4G spectrum.



    Which is probably why this just happened



    http://www.reuters.com/article/2011/...etsNews&rpc=43



    Voda has been agitating for this cash for a while now.



    Verizon Wireless' ownership structure is such that you have to think outside just what makes sense in the US market and have an understanding of what the international carrier landscape looks like.
  • Reply 18 of 59
    plovellplovell Posts: 795member
    Steve knows a bag of hurt when he sees one.



    Blu-Ray is one.



    Sprint is another. CAn't see that ever happening.



    OTOH, I do hope that the next iPhone is an all-carrier model. I'd buy an unlocked one in a flash.
  • Reply 19 of 59
    bushman4bushman4 Posts: 799member
    Nobody can complain about Sprints service as they provide clear and audible service.

    Sprints problem is boring hardware and poor Customer relations. Perhaps the CEO needs to get a random focus group together and learn the facts.

    An Iphone would definately help .
  • Reply 20 of 59
    anantksundaramanantksundaram Posts: 19,061member
    Quote:
    Originally Posted by cloudgazer View Post


    First it wouldn't be Verizon raising the money, it would be Verizon Wireless - and yes, it could do it, but that would substantially leverage the balance sheet and thus reduce divdend payments to the two owners.



    From Vodafone's perspective it's unclear that it would be to their benefit, given how many international subsidiaries they're going to need to build 4G networks for and how many of those will entail considerable assets just to buy the 4G spectrum.



    Which is probably why this just happened



    http://www.reuters.com/article/2011/...etsNews&rpc=43



    Voda has been agitating for this cash for a while now.



    Verizon Wireless' ownership structure is such that you have to think outside just what makes sense in the US market and have an understanding of what the international carrier landscape looks like.



    In your various posts -- pick the topic -- you've been the yoda, the tech guru, the software genius, and now a crack telecom analyst who knows financial markets, role of leverage vs. cash, Vodafone's perspectives, 4G, corporate ownership structures, the international carrier landscape..... you never fail to amaze!



    I am sure the people around you are absolutely and regularly blown away by both the breadth and depth of your insights!
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