Sprint reports $1.6B net loss as it shuts down Nextel platform
Sprint Nextel made a net loss of $1.6 billion for the second quarter, swollen by the cost of shutting down its Nextel wireless network, but the company is more optimistic about future profitability.
The net loss was 16 percent higher than the $1.37 billion reported a year earlier, and included a $430 million charge for accelerated depreciation of Nextel network assets, and $623 million of other charges related to the network shutdown. Revenue totalled $8.88 billion, almost unchanged from a year earlier.
The company renamed itself Sprint on July 12, dropping Nextel from its name barely two weeks after it closed down the Nextel wireless network.
The new Sprint is optimistic about the future: It reported record revenue, subscriber numbers and average revenue per subscriber on its remaining Sprint networks, and has gained access to new spectrum for future growth with the recent acquisition of Clearwire and of spectrum from U.S. Cellular. But the company has also been acquired in its turn by Japanese network operator SoftBank, bringing a cash infusion to Sprint and increasing its leverage with network infrastructure manufactures and handset suppliers.
Were it not for these acquisitions, Sprint said it would have increased its forecast for full-year operating income excluding depreciation, amortisation and exceptional items (“adjusted OIBDA”) to between $5.5 billion and $5.7 billion. Its previous forecast was for adjusted OIBDA of $5.2 billion to $5.5 billion. However, including the effects of the acquisitions it now forecasts adjusted OIBDA of between $5.1 billion and $5.3 billion.
The June 30 closure of the Nextel network had been long planned, but there were still 1.315 million customers using it going into its final quarter of service, 1.06 million of them on contract. Of those, 465,000 became Sprint subscribers, 364,000 of them on contract. The company had around 8.8 million Nextel subscribers in March 2011, and has since lured over 4 million of them to its Sprint networks, it said Tuesday.
Despite these conversions, the company saw a net loss of 520,000 subscribers from its Sprint network in the second quarter, compared to a net gain of 1.28 million a year earlier, leaving it with a total of 53.4 million subscribers.
The company will hold a conference call for investors and analysts Tuesday at 8 a.m. Eastern Time.