Sprint’s Q4 results impacted by iPhone discounts; reveals additional LTE launch cities

9 Feb 2012

Sprint Nextel’s net losses widened in the fourth quarter of 2011 to USD1.3 billion compared to USD929 million a year earlier, on revenues which climbed 5.1% year-on-year to USD8.7 billion, influenced by the cost of introducing end-user discounts for Apple iPhone contracts. Sprint’s gross sales of iPhones totalled 1.8 million in October-December 2011, including around 720,000 to new customers, driving total net additions of 1.6 million subscribers in the quarter, including 668,000 retail subscribers – of which 161,000 were post-paid – and 954,000 wholesale (MVNO) and affiliate subscribers. Sprint’s overall mobile user base was boosted to 55.02 million at the end of the year, 26.9% of which were pre-paid. 86% of gross phone sales during the fourth quarter were smartphones, with 66% of Sprint’s total subscriber base using smartphones as at 31 December 2011.

Financially, the iPhone contract discounts drove Sprint’s total subsidy costs up by USD540 million year-on-year to USD1.7 billion in Q4 2011, which was a factor in reducing fourth-quarter adjusted operating income before depreciation and amortisation (OIBDA) by 36% y-o-y to USD842 million. However, focusing on the operational performance benefits, Sprint CEO Dan Hesse said: ‘The number of iPhones we sold in the fourth quarter was significantly higher than what we had assumed in the business case; and they continue to sell well in the first quarter… Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience.’ Sprint noted that its WiMAX-based subsidiary Clearwire’s fourth quarter 2011 results have not yet been finalised, and as a result, Sprint estimated its share of Clearwire’s results of operations within its own report.

Sprint also gave an update on its upcoming Long Term Evolution (LTE) network launch, revealing that Baltimore and Kansas City are expected to receive LTE alongside upgraded 3G services by mid-2012. It recently announced that LTE and enhanced 3G services are scheduled by mid-2012 in Atlanta, Dallas, Houston and San Antonio.

Elsewhere this week, Sprint Nextel partnered Orange Business Services to provide global machine-to-machine (M2M) connectivity outside the US.

United States, Sprint Corporation (now part of T-Mobile US)